October 15, 2018 / 1:26 PM / a year ago

India's IL&FS secures moratorium against all creditor actions

A bird flies next to the logo of IL&FS (Infrastructure Leasing and Financial Services Ltd.) installed on the facade of a building at its headquarters in Mumbai, India, September 25, 2018. REUTERS/Francis Mascarenhas/File Photo

MUMBAI (Reuters) - India’s Infrastructure Leasing & Financial Services Ltd (IL&FS) said the country’s appellate company law tribunal has passed an interim order granting a moratorium on all creditor actions against the company and its units, providing some relief to the debt-laden firm.

The move will preserve the value of the group’s assets and also help the new IL&FS board in its effort to evaluate and prepare a resolution plan, IL&FS said in a statement on Monday.

The moratorium, effective immediately, prohibits initiation or continuation of any legal proceedings and enforcement of security over assets of IL&FS and group companies.

The Indian government replaced the entire IL&FS board earlier this month after defaults on some of its debt triggered sharp falls in stock and debt markets, sparking fears about contagion in the country’s financial sector.

The firm’s woes led to a series of credit rating downgrades on the company and its subsidiaries that hold some of its 910 billion rupee ($12.34 billion) debt pile.

IL&FS’ problems are potentially far-reaching, and some fear they could threaten India’s economic growth as lenders cut exposure to what are known as non-banking finance companies (NBFCs), which have taken a leading role in lending growth in India.

($1 = 73.7600 Indian rupees)

Reporting by Sankalp Phartiyal and Chris Thomas; Editing by Euan Rocha

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