IL&FS accounts can’t be NPAs without NCLAT nod

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  1. The National Company Law Appellate Tribunal (NCLAT) has said Infrastructure Leasing and Financial Services (IL&FS) accounts will not be declared as non-performing assets (NPA) without approval from the appellate tribunal.
  2. The order comes after the NCLAT said that subsidiaries of IL&FS would be divided into three categories — Green (companies that can meet all debt obligations), Amber (firms that can meet some debt obligations) and Red (companies that can’t meet any debt obligations).
  3. IL&FS is an infrastructure finance company registered with the Reserve Bank of India as a ‘Systemically Important Non-Deposit Accepting Core Investment Company’.IL&FS has run out of money and, therefore, has been unable to service its repayment obligations which led to series of defaults on loans,debentures and commercial papers.
  4. National Company Law Appellate Tribunal (NCLAT) was constituted under Companies Act, 2013 for hearing appeals against the orders of (a) National Company Law Tribunal(s) (NCLT) (b)Insolvency and Bankruptcy Board of India and (c)Competition Commission of India (CCI).