NCLAT orders 75% interim distribution of Rs 175 crore for BKEL lenders, sparking dramatic financial tensions amid rising debts.

The National Company Law Appellate Tribunal (NCLAT) has ordered the interim distribution of 75 percent of the escrow funds, totaling Rs 175 crore, held by Baleshwar Kharagpur Expressway Limited (BKEL) to its secured lenders. This ruling came after a request from the State Bank of India (SBI), as BKEL, which has not serviced its loans since January 2020, has Rs 236.82 crore in its escrow account. The NCLAT stated there was no valid reason for delaying this decision, emphasizing the need for interim payments under existing agreements. BKEL is a special-purpose vehicle linked to ITNL, tasked with developing a road project in Odisha and West Bengal, amid the financial struggles of the IL&FS group.

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Title: NCLAT Approves Interim Payment for Baleshwar Kharagpur Expressway Lenders

In a significant development, the National Company Law Appellate Tribunal (NCLAT) has ordered an interim payment of 75 percent from the escrow account of Baleshwar Kharagpur Expressway Limited (BKEL) to its lenders. This decision comes after a plea from the State Bank of India (SBI), which sought the distribution of Rs 175 crore from the funds held in the escrow account.

The NCLAT stated that it saw no valid reason for the board to delay the interim distribution, as per the Concession Agreement and the Escrow Agreement. They emphasized that 75 percent of the available escrow amount should be distributed to the lenders urgently. The remaining balance is intended for the ongoing operations and maintenance of BKEL.

BKEL has not repaid its loans since January 31, 2020, and as of September 14, 2023, Rs 236.82 crore remained in its escrow account. The consortium of banks, led by SBI, highlighted the necessity for a swift cash distribution to address their financial commitments.

BKEL serves as a special-purpose vehicle primarily responsible for developing the road project between Baleshwar and Kharagpur along NH-60, located in Odisha and West Bengal. The project is part of the broader financing issues faced by the debt-laden IL&FS Group, to which ITNL, the promoter of BKEL, belongs.

This ruling, underscored by the urgency of the financial situation, aims to provide needed liquidity to lenders while ensuring that any disbursed amounts can be reclaimed if found to be undeserved.

With this interim distribution now approved, lenders are optimistic about stabilizing their financial positions amidst ongoing challenges in the infrastructure sector.

Tags: NCLAT, SBI, BKEL, escrow account, interim payment, infrastructure, IL&FS, financial news, road development, India.

Question 1: What does NCLAT stand for, and what is its role?

Answer: NCLAT stands for the National Company Law Appellate Tribunal. It helps resolve disputes related to company laws in India.

Question 2: What is ITNL, and why is it in the news?

Answer: ITNL stands for Infrastructure Development Finance Company. It is in the news because NCLAT has directed its lenders to distribute a significant payment to another company called BKEL.

Question 3: What does the directive about paying 75% to BKEL mean?

Answer: The directive means that the lenders of ITNL must pay 75% of the owed amount to BKEL, which is likely to help BKEL recover its losses or debts.

Question 4: Why is this decision important for BKEL?

Answer: This decision is important for BKEL because receiving 75% of what is owed can provide financial relief and support its ongoing operations.

Question 5: How does this affect the lenders of ITNL?

Answer: This affects the lenders of ITNL by requiring them to pay a large portion of what they owe, which could impact their finances and future lending activities.