TMI Blog2021 (6) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... rishti Das, Advocates i/b Cyril Amarchand Mangaldas. For the Respondent : Mr Rakesh Tiwari, Joint Director, Office of Regional Director (WR), Mumbai. ORDER Per: V. Nallasenapathy, Member (Technical) 1. The present Application is being filed to place before this Tribunal the proposed sale of equity shares of non-Applicant Group companies which are listed on stock exchanges in India, and which are owned by: i. IL FS Financial Services Limited (IFIN), a wholly owned subsidiary of the Applicant and a registered non-banking financial company engaged in primary business of extending loans; and ii. IL FS Maritime Infrastructure Company Limited (IMICL), a subsidiary of the Applicant in the maritime and logistic vertical of the Group Company. (collectively Selling Entities and individually a Selling Entity ). 2. The factual backdrop that led to the present Application may briefly be stated. The Union of India (UoI) filed CP No. 3638 of 2018 against Infrastructure Leasing and Financial Services Ltd (IL FS) under Sections 241 and 242 of the Companies Act, 2013 (the Act) inter alia alleging mismanagement in the Company. 3. This Tribunal by an order dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11/01/2019 observed that the process required to be followed was similar to that of Corporate Insolvency Resolution Process for the purpose of proper Resolution of IL FS and its group companies. The Hon ble Appellate Authority further observed that in such cases the Committee of Creditors (CoC) may be required to be constituted for determining the viability, feasibility and financial matrix of the plan or offer, if any, given by one or other party for acquisition of one or other group companies or its assets and in the absence of any other knowledgeable person such as the Resolution Professional , (if) such Committee of Creditors cannot be constituted, in the meantime the IL FS and its board may be allowed to proceed with the matter. 7. The Hon ble NCLAT by an order dated 04/02/2019 permitted the UoI and IL FS to engage Hon ble Justice Mr. D. K. Jain (Retd.) to supervise the operation of the Resolution Process. Vide same order the Hon ble NCLAT directed the UoI and IL FS to file an affidavit inter alia setting out the names of entities in the IL FS Group which are incorporated within the territorial jurisdiction of India (Indian IL FS Entities) and entities that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 08/08/2019 and the Red Entities are permitted to make payment inter alia to operational creditors, employees and workmen to maintain their going concern status. 11. IFIN and IMICL the companies in the Applicant Group are categorized as Red Entities. The listed shares owned represent the following assets of the each of the selling entities: i. IFIN listed shares (infra) were historically available with IFIN as repayment security for loans extended by IFIN to certain third party borrowers. On account of defaults committed by such borrowers, IFIN enforced the pledge over the relevant IFIN Listed shares and applied the same towards discharge of the amounts due from the borrowers. ii. IMICL listed shares (infra) represent the non-core assets of IMICL that were transferred to IMICL pursuant to a merger scheme approved by High Court of Bombay vide its order dated 23.12.2011. 12. As per the mandate of the New Board, the Board of Directors of each of the Selling Entities have approved a proposal relating to the sale of the relevant Listed Shares. The Board of Directors of IFIN approved the sale of shares of listed entities held by IFIN vide the resolution dated 04/04/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 IFIN Adhunik Metaliks Ltd 13,183,881 Pledge Invoked Average Acquisition price is Shares are trading in the range ₹ 4.78 per share of ₹ 1.05 to ₹ 1.15 per share Debentures of IFIN pursuant to the Contributory Mortgage Deed (CMD dated 25.07.2018) and Debenture Trust Deeds executed for securing the secured debentures. 4 IFIN Reliance Naval Engineering Ltd (Pipavav) 33,065,008 Pledge Invoked Average Acquisition price is ₹ 32.92 per share Shares are trading in the range of ₹ 1.25 to ₹ 1.35 as currently the company is under NCLT 5 IFIN Reliance Naval Engineering Ltd (Pipavav) 3,643,387 Strategic Average Purchase Price is &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion of the said process and subsequent identification of a successful bidder and selling price, if the market price of the listed shares depreciate on account of market forces, the identified bidder would be unlikely to pay the selling price as identified by means of the public sale process. 18. The Applicant submits that the sale of the listed shares is essential to create liquidity and provide the Selling Entities with cash flow to service their operational expenses and maintain their going concern status. The amounts so realized from the sale of listed shares (the Sale Proceeds ) are proposed to be applied in the following manner: (i) to meet the going concern payments of such selling entities to the extent amounts are not available from any other source to the selling entity to ensure that each of the selling entity is able to continue as a going concern through the resolution process. (ii) to meet the cost of resolution process through sale of the Selling Entity as well as sale of any of the subsidiaries of that Selling Entity, to the extent such amounts are not available to the subsidiaries from any other source to ensure that such Selling Entity is able to co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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