IL&FS to file bankruptcy for its offshore firms IIDL, IIDMCC in UAE

By :  Legal Era
Update: 2020-09-03 13:48 GMT
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Debt-ridden IL&FS has proposed to initiate bankruptcy proceedings for two of its offshore firms -ITNL Infrastructure Developers LLC (IIDL) and ITNL International DMCC (IIDMCC) - in the courts of the UAE. The debt ridden firm had requested the Mumbai-bench of the National Company Law Tribunal (NCLT) to take on record its proposal to initiate the bankruptcy proceedings before the Dubai...

Debt-ridden IL&FS has proposed to initiate bankruptcy proceedings for two of its offshore firms -ITNL Infrastructure Developers LLC (IIDL) and ITNL International DMCC (IIDMCC) - in the courts of the UAE. The debt ridden firm had requested the Mumbai-bench of the National Company Law Tribunal (NCLT) to take on record its proposal to initiate the bankruptcy proceedings before the Dubai Courts under UAE Federal Decree.

The NCLT approved the decision of the newly constituted board of the IL&FS and observed that the initiation of bankruptcy proceedings was the best option for the two firms.

After hearing both the sides and on perusal of records, this bench is of the view that the initiation of bankruptcy proceedings is the best option in the given scenario. The same is recorded as prayed for. In the circumstances, the proposal of the applicant for initiation of insolvency proceedings of IIDL and IIDMCC is taken on record,” the NCLT said.

The tribunal also observed that there was no objection from the Petitioner (Ministry of Corporate Affairs) for the proposal. Justice D K Jain is supervising the assets and has accorded his approval for initiation of bankruptcy proceedings for both the firms in May this year.

The offshore entities of the IL&FS group have been exempted from the resolution framework by the National Company Law Appellate Tribunal (NCLAT) through its order dated February 11, 2019.

The IL&FS Board has to inform the NCLT about the decisions and actions taken for the resolution of offshore IL&FS Group Entities which places it in on the record, unlike the domestic entities, whose sale has to be approved by the tribunal.

IIDMCC is a wholly-owned subsidiary of ITNL International Pte Limited (IIPL), which is a step-down firm of IL&FS Transportation Networks Ltd (ITNL). IL&FS holds around 73% in ITNL.

IIPL holds 49% shareholding in IIDL and the balance 51% is held by one MAK Holdings LLC. IIDL was incorporated for implementing Transport Infrastructure Projects in UAE on public private partnership (PPP).

IL&FS had earlier recommended divestment of IIPL’s stake in IIDL. But, the proposal could not be carried out successfully and the negotiations with the investors failed. The Dubai Courts had on October 7, 2019, issued the default notice to IIDL as IIDL failed to discharge its financial obligations.

The outstanding liabilities of IIDL as on December 31, 2019, stands 59.60 lakh AED (United Arab Emirates Dirham), which mostly comprise of unpaid salaries of employees, service benefits and vendors payments.

The liability of IIDMCC is 30.08 lakh AED and has virtually no assets.

By - Legal Era

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