National Company Law Tribunal (NCLT) accepted telecom operator Aircel’s bankruptcy petition, and issued a directive that the directors, promoter and chairman and managing director of the company should not leave without permission till further offers.
According to people in the know, Vijay Iyer of consultancy firm Deloitte Haskins & Sells has been nominated as insolvency resolution professional (IRP) from Aircel’s side to start the resolution process.
The tribunal rejected GTL Infrastructure’s intervention application, saying that operational creditors cannot be party at this juncture.
Two weeks back, the Chennai-based operator, and its two units — Dishnet Wireless and Aircel Cellular — filed for bankruptcy in the NCLT Mumbai bench after over four months of attempts to settle the matter with lenders. Banks had finally accepted the company’s request to undertake strategic debt restructuring, when the Reserve Bank of India scrapped loan recast schemes and left Aircel with no option but to file for bankruptcy under the Insolvency & Bankruptcy Code, 2016.
Once an IRP is appointed, the management will be dissolved and resolution professionals will lead the way ahead, explained the lawyer. Law firm J Sagar Associates along with senior counsel Janak Dwarkadas and Zal Andhyarujina are advising Aircel in the bankruptcy case.
Aircel and its units under a debt of Rs 50,000 crore to financial and operational lenders and had said am IRP was needed urgently since it would resolve issues around continuation of services, repayment of loans, payment of salaries and reiterated that there was threat to staff since security personal too were unpaid.
“Where has this money gone? This is a huge debt,” asked the tribunal bench, headed by MK Shrawat.
Operational creditor GTL infrastructure had appealed for a petition copy demanding that the tower firm be given couple of days to see if there are any parts of the petition which went against the Delhi High Court passed on January 29.
The tower firm had filed a petition for recovery of Rs 800 crore. The court had ordered an interim injunction saying no assets of Aircel would be moved or sold without a petition for the same. Consortium of bankers led by SBI had then said that in case of a liquidation they would need to recover via sale of assets etc. GTL said it Aircel currently owns the firm Rs 1000 crore.
Aircel’s senior counsel represented by Janak Dwarkadas argued that his client’s petition in NCLT was under Section 10 for urgent appointment of IRP and had no impact on Delhi High Court order.
The bench also asked why the salaries were unpaid. said that their assets under open Trust and Retention account was frozen.
The telco’s assets listed out include license fee and spectrum worth Rs 10,000 crore, fibre and towers worth Rs 22,000 crore.
Dwarkadas had argued that if petition is accepted then a resolution is possible otherwise the assets would be sold in a firesale and there would be no possibility of network continuation impacting customers at large. “We may even lose spectrum. Department of telecom may even ask us to return our license”, he said.
ET had reported March 2 that the mobile phone operator is in talks with investors for strategic financing and is negotiating with Bharti Airtel and Reliance Jio Infocomm for intra-circle roaming pacts. Discussions are also on with a key vendor to keep its network running and preserve the company’s value, which will be crucial to IRP’s efforts to keep the company going.
Aircel said it has requested its partners and vendors to continue to provide their services to enable the telco to serve its some 50-million active users.
Aircel hasn’t been able to service its debt due to falling revenues and dwindling cash flows after prices were slashed amid fierce competition with the entry of Reliance Jio Infocomm in September 2016. The operator’s woes were compounded after its parent, under Malaysian businessman Ananda Krishnan, stopped funding it.
Most of Aircel’s debt comes from loans raised to buy spectrum, including broadband wireless airwaves (BWA) back in 2010. As of early 2017, dues Aircel owed to local banks including State Bank of India, its leading lender, stood at Rs 12,627 crore, while foreign currency debt stood at about Rs 595 crore, and debt from offering bank guarantees and letters of credit stood at Rs 3,232 crore.
A planned merger with RCom was hampered by delays in approvals and a Supreme Court order preventing the sale of Aircel’s spectrum in connection with a separate 2G case.
Dwarkadas told the court that operators revenues were steadily going down from Rs 500 crore in 2016 to Rs 400 crore in 2017.
All creditors of Aircel including telcos, tower companies and equipment suppliers, are now preparing to head to the NCLT to recover their dues from the debt-ridden operator. Idea Cellular and Vodafone India have stopped taking calls to their users from those of Aircel due to non-payment of interconnection fees.
The telecom department, which has bank guarantees equalling the dues that Aircel owes to the government, is awaiting NCLT’s directions on the Aircel petition before it decides whether to encash them as a means to ensuring that the dues.
Source: Economic Times