NCLAT Asks Renewal of Bank Guarantee for IL&FS Deal

New Delhi, Dec 12 (PTI) Insolvency appellate tribunal NCLAT on Friday directed Brookfield-backed Chronos Properties to renew the bank guarantee for acquiring the Infrastructure Leasing and Financial Services Ltd (IL&FS )'s flagship Bandra Kurla Complex property.

Passing an interim order, the National Company Law Appellate Tribunal also directed the debt-ridden IL&FS group not to create third-party rights on its headquarters until the appeal is finally decided.

NCLAT has directed the Brookfield firm Chronos to comply with the condition of renewing the Performance Bank Guarantee to avoid disqualification in the process of acquiring the IL&FS headquarters.

The NCLAT has directed both parties to complete pleadings, file reply and rejoinder by January 16, and has adjourned the matter for the next hearing on February 2.

The appellate tribunal direction came after an appeal filed by Brookfield challenging NCLT's recent order that upheld IL&FS's right to enhance the purchase consideration for the headquarters property under the contractual provisions of the LoI, in line with the value-maximisation principle underpinning the IL&FS resolution framework.

While affirming IL&FS' contractual powers, the NCLT had held that Chronos' failure to renew the bank guarantee could not, by itself, lead to disqualification, and granted it time to submit a fresh bank guarantee equivalent to 10 per cent of the bid value with the tribunal registrar.

NCLAT has now reiterated this requirement, directing Chronos to comply with the bank guarantee condition within the stipulated timeframe, while continuing interim protection on the asset pending final adjudication of the appeal.

Earlier on December 1, the Mumbai bench of the National Company Law Tribunal (NCLT) dismissed the Rs 1,080-crore bid by Brookfield-backed Chronos Properties to acquire IL&FS' Bandra Kurla Complex property.

NCLT, in its order on November 28, disposed of the application filed by Chronos seeking enforcement of the Rs 1,080-crore bid to acquire the IL&FS office premise.

In its order, the NCLT held that the Letter of Intent (LoI) dated March 21, 2022, constitutes a concluded and binding contract between IL&FS and Chronos.

However, the LoI contains clauses which grant IL&FS a unilateral right to amend, modify or supplement the LoI, including financial terms, under the court-approved resolution framework, the order added.

The tribunal also ruled that the IL&FS letter dated August 16, 2024, which enhanced the consideration from Rs 1,080 crore to Rs 1,481 crore, is valid and cannot be quashed.