Those under the red category are not in a position to repay even secured creditors, while firms under the amber category have cash flow for payment to secured creditors, but not enough to meet the claims of unsecured creditors.
According to the binding term sheet, which involves a revised proposal for debt-restructuring, there will be certain concessions and modification of terms of financial debt availed by these entities from lenders. This includes release of cash flow from existing accounts to service financial and operational creditors, a reduction in debt service coverage ratio requirement, and a revision in interest rate charged to the entity, the counsel for the new board of IL&FS
told the NCLAT
So far, the board has classified 150 entities into green (55), red (82) and amber (13). The IL&FS
group has 302 entities, of which 169 are in India and the rest are overseas. The collective debt of the green entities, according to the fifth progress report, was more than Rs 11,000 crore. The amber and red entities have a debt of Rs 16,372 crore and Rs 61,375 crore, respectively.
A plan to further reclassify another nine firms in the amber category is in the works.
In some of these cases, there have been problems where lenders have not come to an agreement either on the extent of haircut, or on the reduction in interest rate. Some lenders have also raised objections to the repayment schedule proposed in the plan, the counsel informed NCLAT.