IL&FS Asset Sale: NCLT Clears Major Step in Resolution.
In a major boost to India’s insolvency resolution efforts, the National Company Law Tribunal (NCLT) has approved the sale of 18 subsidiaries of IL&FS. This decision, involving a substantial portfolio of Mumbai-based entities, marks a critical move towards resolving one of India’s most complex financial collapses.
This blog breaks down the IL&FS asset sale, what the NCLT’s order means for different stakeholders, and its implications for future IBC-driven restructurings.
What Is IL&FS and Why Was It in Trouble?
- It triggered a systemic risk across NBFCs and infrastructure financing in India.
- The government took control and initiated resolution under the Insolvency and Bankruptcy Code (IBC).
What the NCLT Order Approves
✔ Green signal for the sale of Mumbai-based entities with significant asset value
✔ Route cleared under Section 230 of Companies Act, 2013 (Scheme of Arrangement)
Why This IL&FS Asset Sale Matters
- Faster Creditor Recovery: Secured and unsecured creditors will now see partial recovery.
- Sets Precedent: Use of Company Act’s compromise mechanism along with IBC is a hybrid resolution path.
Key Takeaways for Creditors and Investors
| Aspect | Impact |
|---|---|
| Creditors | Can file claims as per valuation approved by NCLT |
| Investors | Entities sold will be restructured or taken over |
| NBFC Sector | Boosts confidence in recovery mechanism post default |
| Government & RBI | Shows coordinated role in resolving systemic risk |
This Matters for Indian Businesses
- Avoid long legal battles—structured exits under IBC save time and money.