NCLAT looking to protect PF, pension funds investments

New Delhi: Courts have 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 trusts.

Sources said that the National Company Law Appellate Tribunal (NCLAT) hearing petitions with respect to IL&FS resolution, has now asked the new management of the insolvent company to provide it details of PF and pension funds investment in individual "amber" entities.

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.

At the previous hearing on March 19, IL&FS had informed NCLAT that out of its 169 domestic companies, 50 entities (earlier 21) have been classified as green, while 13 (earlier 10) have been classified as amber and 80 as red. The total outstanding debt of the 13 "amber" companies is Rs 16,373 crore.