NCLT Mumbai Approves ₹75 Crore IL&FS Financial Services–Siva Green Power Settlement

The National Company Law Tribunal (NCLT) in Mumbai has recently approved a One Time Settlement (OTS) of ₹75 crore between Infrastructure Leasing and Financial Services Limited (IL&FS) and Siva Green Power Projects India Private Limited. This decision was made in accordance with the IL&FS Group Resolution Framework, which was mandated by the National Company Law Appellate Tribunal (NCLAT).

The settlement is a significant step in the ongoing resolution process of the IL&FS group, which has been under scrutiny for financial irregularities and defaults. The approval by the NCLT ensures that the financial burden on both parties is mitigated, and the resolution process moves forward in a structured manner.

Siva Green Power Projects India Private Limited, a part of the Siva Group, has been involved in various renewable energy projects across India. The settlement agreement is expected to provide a clear path for the company to continue its operations without the overhang of the IL&FS debt.

The IL&FS group, once a prominent name in infrastructure financing, has been embroiled in a major financial crisis since 2018. The crisis led to the appointment of a new board by the government and regulatory authorities, aiming to restore confidence and stability in the group's operations. The NCLT's approval of the settlement is a positive development in this direction.

The NCLT bench, comprising a judicial member, reviewed the settlement proposal and found it to be in line with the resolution framework. The framework was designed to ensure that the resolution process is transparent, fair, and in the best interest of all stakeholders, including creditors and investors.

The settlement also includes provisions for the repayment of the outstanding amount in a structured manner, ensuring that the financial health of both entities is not compromised. This approach is expected to set a precedent for similar settlements in the future, contributing to the overall stability of the financial sector.

In addition to the financial settlement, the agreement requires Shanmugha Real Estate and Promoters Private Limited, another Siva Group entity, to buy back the shares for ₹253.56 crore if certain conditions are met. This provision adds an additional layer of security and ensures that the interests of all parties are protected.

The approval of this settlement by the NCLT is a testament to the effectiveness of the resolution framework and the judiciary's commitment to resolving complex financial disputes in a timely and efficient manner. It is hoped that this settlement will pave the way for more such agreements, ultimately leading to the stabilization and recovery of the IL&FS group.

The IL&FS group's resolution process has been closely monitored by regulatory authorities, and this settlement is a crucial milestone in that journey. It demonstrates the ability of the legal and financial systems to address and resolve large-scale financial crises, ensuring that the interests of all stakeholders are balanced and protected.

In conclusion, the NCLT's approval of the ₹75 crore settlement between IL&FS and Siva Green Power Projects India Private Limited is a significant step forward in the resolution of the IL&FS group's financial issues. It sets a positive precedent for future settlements and underscores the importance of structured and transparent resolution frameworks in managing financial crises.