IL&FS approves Siva Shelters's proposal to restructure loan to subsidiary

Siva Shelters offers to pay 20% of settlement amount immediately on signing of agreement

IL&FS has approved a one time-debt restructuring proposal by Siva Shelters and Construction (SSCL), which offered to pay Rs 70 crore of its dues worth Rs 76.8 crore. SSCL’s offer is subject to the National Company Law Tribunal’s approval.

IFIN, a subsidiary of IL&FS, the bankrupt infrastructure financing and construction company, had disbursed Rs 50 crore as loan to SSCL. The loan—part of a sanctioned Rs 175 crore--was secured by way of an exclusive registered mortgage over approximately 17 acres of land parcels in Chennai. The loan was classified as a non-performing asset (NPA) on May 30, 2019.

A spokesperson for IL&FS said the company does not comment on specific settlement proposals. “However, all such settlements need final approval from NCLT, which is awaited/pending in this case,” said the spokesperson.

SSCL, which is owned by Chennai-based entrepreneur C Sivasankaran, offered to pay Rs 70 crore, or 91 per cent of the total outstanding. It has sought waiver of only Rs 6.92 crore, as per the proposal. SSCL also offered to pay interest at an existing rate of 14 per cent until all dues are fully cleared under the one-time settlement (OTS) and pay penal interest of 2 per cent until the date of settlement.

The company has offered to pay 20 percent of the settlement amount immediately on the signing of the agreement and to pay the balance 80 per cent within six months and the haircut to be borne against the term loan availed by SSCL from IFIN will be only Rs 6.92 crore. As the receipt of settlement amount under the OTS, with acceptable sources of funds for repayment, is a better option given that the land parcel given under collateral is under the ED attachment, retired justice DK Jain approved the proposal on May 30.