Govt may move to seize control of IL&FS management, supercede current board

The Indian government may move to seize control of the management of an Indian financier that’s roiled markets by defaulting on debt, according to media reports, with the move coming just after the beleaguered company unveiled details of a restructuring proposal.

The Mumbai bench of the National Company Law Tribunal will hear a ministry of corporate affairs case against Infrastructure Leasing & Financial Services Ltd. and others on Monday, according to a cause list on its website. The government may seek a management change and look to supersede the existing board, CNBC reported in a Twitter post, citing government sources it did not name. India’s corporate affairs ministry has only sought to take control of a company on two prior occasions.

Rescuing IL&FS group, which has total debt of $12.6 billion -- 61 percent in the form of loans from financial institutions -- is vital for authorities to stem the risk of default spreading to other lenders in the world’s fastest-growing major economy. Infrastructure Leasing & Financial Services Ltd. stockholders over the weekend separately endorsed a plan to raise as much as 150 billion rupees ($2.1 billion) through a non-convertible debt sale and increase the firm’s borrowing limit by 100 billion rupees to 350 billion rupees.