Two subsidiaries of IL&FS Transportation Networks Ltd (ITNL), West Gujarat Expressway Limited (WGEL) and Jharkhand Road Projects Implementation Company Limited (JRPICL), have stopped repaying lenders, instead seeking refunds for debt repaid after 15 October 2018.

According to Indian Ratings, JRPICL has outstanding non-convertible debentures (NCDs) of INR17.3 billion (US$243.3 million), and WGEL has outstanding non-convertible debentures of INR1,412.6 million (US$19.89 million).

In October 2018 ITNL's parent company, Infrastructure Leasing & Financial Services (IL&FS) filed an application with the National Company Law Tribunal (NCLT) for a moratorium on creditor proceedings against itself and its subsidiaries. The NCLT granted a temporary moratorium. WGEL and JRPICL are using this interim order to demand that their lenders instruct the debenture trustees and the escrow bank to release debt repayments made after 15 October 2018.

India Ratings has stated that such action would put infrastructure project financing using special purpose vehicles (SPVs) under significant risk. If JRPICL and WGEL are able to stop the repayments, then the ratings on the bonds will have to be downgraded to ‘IND D’ (default). Such defaults will not only destabilise all of the company's ratings but also call into question the effectiveness of their ring-fenced structure.