Govt may mount a Satyam-like rescue operation for IL&FS

The Centre may mount a Satyam-like rescue operation for the cash-strapped Infrastructure Leasing & Financial Services (IL&FS) and its group firms. The government has moved the National Company Law Tribunal (NCLT) for a change in the company's management. The order is expected by afternoon. The government is likely to supersede the IL&FS board and change the company management. The government intervention comes after IL&FS defaulted on repayments and has had its debt rating downgraded, which has in turn roiled the markets. The net-owned funds of the finance company have been wiped out. The IL&FS group has a total debt obligation of over Rs 90,000 crore, of which bank loans account for Rs 57,000 crore, mostly from state-run lenders. 66024143 The move is reminiscent of the action it took in the Satyam scam case in 2009. In one of the biggest corporate scandals in India, Satyam Computer Services chairman Ramalinga Raju confessed that the company's accounts had been falsified at a large scale. The Company Law Board superseded the company board and appointed 10 nominal directors. The government nominated banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam's board to control the damage.According to an ET report, lenders to IL&FS have declined to provide additional loans of Rs 3,500 crore to the term-lending institution unless a resolution plan explaining how debt will be repaid is put in place. The development comes as shareholders of the company have voted in favour of raising Rs 15,000 crore in the form of debt while the IL&FS bonds trustee had barred it from distributing any dividends. IL&FS, under threat if its proposed rights issue fails and if lenders move the bankruptcy court to recover dues, has sought a one year loan of Rs 3,500 crore to meet payment obligations.

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