NCLAT Clears IL&FS to Sell Paradip Refinery Unit

2 Dec 2024 , 01:05 PM

The National Company Law Appellate Tribunal (NCLAT) has passed an order to enable the successful bidder to acquire a subsidiary in the IL&FS group, namely IL&FS Paradip Refinery Water Ltd. (IPRWL). The company’s sale would help to pay around ₹1,000 crore of debt of the IL&FS.

Established by IL&FS to cater for the paradip refinery of 15 MTPA project under Indian Oil Corporation at Odisha. IL&FS had approached IOC for consent to sell its stake in IPRWL but did not get it. IL&FS filed an appeal before NCLAT, seeking either IOC acquire 100% of IPRWL at a fair valuation or grant consent for the sale as per the BOOT (Build, Own, Operate, Transfer) agreement.

IOC argued that the BOOT agreement, valid until 2039, does not allow disinvestment before the agreement’s expiry. NCLAT rejected IOC’s claim, enabling IL&FS to sell IPRWL to a bidder meeting the technical and operational criteria of the BOOT agreement.

As directed by NCLAT, the sale will be conducted as per the terms of the resolution framework. IL&FS has repaid ₹38,082 crore to creditors as of September 30, 2024 and is resolving debts from its 302 entities. NCLAT has fixed the timeline for the resolution of remaining 58 entities of IL&FS as March 31, 2025, and accordingly extended the moratorium. The total external debt of IL&FS was ₹99,355 crore as of October 2018, and fund-based debt was ₹94,215 crore.