IL&FS Group Subsidiary Placed in "Red List" for Financial Distress, Board and Shareholders Approve CIRP Initiation; Moratorium Declared and IRP Appointed
In a significant development under the Insolvency and Bankruptcy Code, 2016 (IBC), the National Company Law Tribunal (NCLT), Ahmedabad Bench, has admitted Gujarat Integrated Maritime Complex Private Limited (GIMCO) into the Corporate Insolvency Resolution Process (CIRP) pursuant to an application filed under Section 10 of the IBC by the company itself. The order was passed on September 22, 2026, by the bench comprising Mrs. Chitra Hankare, Judicial Member, and Mr. Velamur G Venkata Chalapathy, Technical Member.
GIMCO, a subsidiary of the Infrastructure Leasing & Financial Services (IL&FS) group, was placed on the IL&FS Group's internal "Red List" due to severe financial distress, lack of viable ongoing business operations, and mounting liabilities. The company's project for developing a shipbuilding and repair facility at Nana Layja, Kutch, was terminated due to non-obtainment of necessary statutory clearances, resulting in forfeiture of allotted land and substantial financial losses.
The IL&FS New Board, appointed by the Ministry of Corporate Affairs (MCA) in 2018 following the supersession of the erstwhile IL&FS board, devised a comprehensive Resolution Framework under the supervision of Hon'ble Justice (Retd.) D.K. Jain. This framework, approved by the National Company Law Appellate Tribunal (NCLAT), envisaged a structured resolution and distribution mechanism for IL&FS group entities including GIMCO.
Following multiple rounds of unsuccessful attempts to sell the company's assets, and after approval from the IL&FS group's board of directors, shareholders, and Justice (Retd.) D.K. Jain, GIMCO resolved to initiate insolvency proceedings. The company's board passed a resolution on January 10, 2025, authorizing the filing of the Section 10 application to commence CIRP, which was subsequently allowed by NCLT Mumbai on July 22, 2025. The present order by NCLT Ahmedabad is consequential to that approval.
The tribunal declared a moratorium under Section 14 of the IBC, prohibiting all suits, transfers, or enforcement actions against the corporate debtor. The management of GIMCO was suspended and directed to cooperate fully with the Interim Resolution Professional (IRP), Mr. Bhavan Trivedi, appointed by the tribunal. The IRP is tasked with protecting the company's assets, managing operations as a going concern, and inviting claims from creditors.
The application also highlighted that voluntary liquidation was not feasible for GIMCO due to the company's default and insufficient assets to cover its debts, making CIRP the appropriate remedy under the IBC.
The Income Tax Department has reported outstanding demands against GIMCO totaling over Rs. 18 crores for various assessment years along with pending appeals related to income tax assessments and penalty orders.
This judgment underscores the continuing efforts to resolve the debts of IL&FS group companies through a structured insolvency framework, aiming to maximize value for creditors while ensuring legal compliance under the IBC.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Application under Section 10 by corporate applicant itself - Subsidiary of IL&FS placed in "Red List" due to financial distress and absence of viable business operations - After approvals from board, shareholders, Justice (Retd.) D.K. Jain and NCLT Mumbai in terms of IL&FS resolution framework, NCLT Ahmedabad admitted company into CIRP, declared moratorium and appointed IRP.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 10, 13, 14, 15, 17, 18, 19, 20, 21; Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 Rule 7; Companies Act, 2013 Sections 241-242
