NEW DELHI , April 9: Courts have finally come to the rescue of lakhs of investors who face the prospect of losing their entire retirement savings parked in the toxic IL&FS bonds by their respective pension and provident fund (PF) trusts.
The National Company Law Appellate Tribunal (NCLAT) hearing petitions with respect to IL&FS resolution on Monday directed the new management of debt-ridden firm to submit details of investment made by pension and provident funds in its four group firms along with details of and financial liabilities of those entities.
These four 'amber' companies are -- Hazribagh Ranchi Expressway, Jharkhand Road Project Implementation Company, Moradabad Bareily Expressway and West Gujarat Expressway.
The appellate bankruptcy court observed that the money invested by pension fund, and PFs does not belong to IL&FS companies and is related to the employees. Therefore it should be released first when loan repayments begin.
IANS was first to report on April 1 about NCLAT's plan to come to the rescue of funds that invested pension money of employees in IL&FS bonds.
During the proceedings of the appellate tribunal on Monday, a two-member bench headed by Justice S.J. Mukhopadhaya also made clear that it has not stopped IL&FS and its group entities from going for resolution process.
The court has asked the new management of the insolvent company to provide it details of PF and pension funds investment in individual "amber" entities. There are 13 such entities and court has first taken out four for preparing the chart on investment and held that the remaining nine should also give details of PFs investment by courts during next hearing on April 16.
The move, legal experts said, should be seen as the court's efforts to ensure that investments by pension and PF trusts is not lost in any resolution plan for IL&FS and that these get priority even when repayment start for "amber" grouped entities where firms are expected to meet only operational payment obligations.
Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL&FS bonds. As these investments were classified as unsecured debt, funds feared that all money would be lost if all market-related risks fell on them.
Under the resolution plan, the government has categorised IL&FS group companies into green, amber and red categories based on their financial position.
Firms classified as "green" would continue to meet their payment obligations, while "amber" category firms can meet only operational payment obligations to senior secured financial creditors.
Those under the "red" category are the entities which cannot meet their payment obligations at all. - IANS