Aircel’s committee of creditors (CoC), headed by State Bank of India (SBI), has moved the Supreme Court against the National Company Law Appellate Tribunal’s (NCLAT) decision that forbade the bankrupt telco from selling its spectrum until government dues are cleared.
“We have approached the Supreme Court in anticipation that they would set aside this (NCLAT) order as liquidation threat looms large over this firm (Aircel),” said a senior official in SBI.
People familiar with the matter said Aircel resolution professional Deloitte and asset reconstruction firm UVARCL, which had been cleared by the National Company Law Tribunal (NCLT) to take over the assets of Aircel, will also separately move the top court challenging the appellate tribunal’s order.
Deloitte declined to comment while UVARCL and SBI did not respond to ET’s request for comments.
ET had published that the lenders were considering moving the SC in its April 14 edition.
In April, NCLAT ordered that “The spectrum cannot be utilised without payment of requisite dues, which cannot be wiped off by triggering CIRP (corporate insolvency resolution procedure) under the I&B Code (Insolvency and Bankruptcy Code)…Defaulting licensees/ telcos cannot be permitted to wriggle out of their liabilities…”.
The NCLAT order impacts not just the Aircel insolvency resolution process but that of another bankrupt telco, Reliance Communications (RCom), which is fighting a similar battle with the Department of Telecommunications (DoT) over spectrum dues.
Deloitte is also the RP for RCom, whose spectrum and fibre assets were cleared by lenders to be picked up by UVARCL, though this proposal is yet to be cleared by the NCLT.
The spectrum dues pointed out are adjusted gross revenue (AGR) dues in which the three defunct telcos owe about Rs 40,000 crore to the government – Aircel (Rs12,389 crore), RCom (Rs26,000 crore) and Videocon Telecommunications (Rs1,376 crore). DoT, an operational creditor, has claimed additional dues of Rs 14,000 crore from Aircel, which includes defaults on non-payment of instalments for the right to use spectrum.
But an industry executive familiar with the matter said DoT can’t be given anything more than what is apportioned as part of Aircel’s bankruptcy resolution process.
“DoT is an operational creditor and therefore dues cannot be separately given outside what was approved in the resolution plan of Aircel,” said the executive closely involved with the telco’s resolution process. As per the plan approved by the dedicated bankruptcy court for Aircel, operational creditors, including DoT, were provided Rs 28.50 crore — 0.16% of the Rs 17,462 crore claimed.
The lenders moved SC because they fear that their efforts to resolve the financial mess of the bankrupt telcos – Aircel and Rcom – will go kaput if the appellate tribunal’s order is not set aside. Along with other lenders, SBI was hoping to recover Rs 25,000-30,000 crore from the two resolution plans under the IBC against their claims of over Rs1,16,000 crore.
If Aircel and RCom are pushed into liquidation, SBI would be hurt the most, having loaned Rs 12,000 crore to the two telcos. The likes of Bank of India, Canara Bank, Syndicate Bank and Industrial and Commercial Bank of China (ICBC) are among over 40 lenders having exposure to the two carriers.
Ownership of spectrum has been the main hurdle in the resolution of these defunct telcos. The DoT’s stance is that spectrum is a national asset that cannot be transferred to a third party, unless statutory dues are paid and after its approval as per airwave trading rules.
Deloitte in the case of Aircel and RCom, and the lenders of these ailing telcos argue that spectrum is a natural resource that cannot be kept idle and that they were well within their rights to reassign it to recover the dues. The legal hurdles have already led to delay in recoveries and will further erode the value of assets, they claim.
According to the resolution plan approved by the NCLT in June 2020, UVARCL is supposed to take over Aircel’s assets, including spectrum, for Rs 6,630 crore, with lenders taking a haircut of 89% on total dues of Rs 58,670 crore. UVARCL was expecting to generate the biggest chunk of funds — Rs 800-1,300 crore — through the sale of spectrum in the 1800 MHz and 2100 MHz bands. The NCLT is yet to approve UVARCL’s plan for RCom.
However, spectrum is not the only major roadblock the two ailing telcos. Whether an ARC can pick up the assets of an insolvent company under the IBC code is also getting examined by regulatory bodies including Reserve Bank of India (RBI).
