A NCLAT-bench headed by Chairperson Justice S J Mukhopadhaya said its formula would balance the interests of all stakeholders, including creditors.
The tribunal has also asked some of the lenders to file revised framework proposed by the Ministry of Corporate Affairs within a week, stating their position in the resolution of IL&FS group, which has a cumulative debt of over Rs 90,000 crore.
“We are looking at the public interest, what should be done for the purpose of survival of the company which includes all those who have financed,” the bench said.
It also said, “Let us have a formula in place for distribution. Creditors’ interest is also public interest”.
Senior advocate Ramji Srinivas representing IL&FS board submitted that the revised resolution framework provided a fair and equitable formula for distribution of sale proceeds catering to the interests of all creditors.
As per the road-map for IL&FS, which has a total debt of over Rs 90,000 crore, its group companies have been categorised into three categories — Green, Amber and Red — based on their respective financial positions.
Companies under the green category will be those that continue to meet their payment obligations.
Amber category is for those companies that would not be able to meet their obligations but can meet only operational payment obligations to senior secured financial creditors.
Amber category entities “are permitted to make only payments necessary to maintain and preserve the going concern”.
Companies falling in the red category are the entities which can not meet their payment obligations towards even senior secured financial creditors.
Such companies will be permitted to make payment necessary to maintain and preserve.
The entire resolution process is based on the principles enunciated in the Insolvency and Bankruptcy Code.