Justice D K Jain to supervise process the resolution plan for IL&FS

The government recently submitted the debt resolution plan for IL&FS to the NCLAT and also suggested the name of Justice D K Jain, retired Supreme Court judge to supervise the entire process.

The entire resolution process would be based on the principles enunciated in the Insolvency and Bankruptcy Code (IBC) and under the plan, the government has categorised IL&FS group companies into green, amber and red based on their respective financial positions.

During the conduct of the resolution process of the IL&FS group, payments will be permitted only to maintain and preserve the going concern status of the companies of the IL&FS group," the ministry said in its affidavit detailing the resolution plan. As per the ministry, it would maintain the waterfall system during asset monetisation, wherein the seniority of lenders would be maintained as is done under the IBC.

The distribution of the sale proceeds would be in accordance with the waterfall mechanism specified under section 53 of the IBC. Further, under Section 53 of IBC, senior secured creditors loans are cleared first and any surplus that remains thereafter is given to unsecured or subordinated creditors and thereafter to the equity owners.

Justice (Retd) D K Jain to decide and give onsent and to discuss the terms and conditions of engagement including monthly fee, travelling expenses, allowance etc," the two-member NCLAT bench said. According to the resolution plan, a suitable eligibility criterion will be stipulated, approved by the newly appointed directors and then expression of interests will be invited for the same.

It further said, that upon receipt of the recommendations, a successful bidder would be declared, who will deposit the earnest money. Upon declaration of the successful bidder, documentation of the sale will be completed and the forwarded to National Company Law Tribunal for the final approval.