LENDERS TO ENFORCE GUARANTEES OF AIRCEL PROMOTERS
Lenders to Aircel are looking at the option to invoke the corporate guarantees given by the former promoters of the wireless telephony company. The company had defaulted on debts of ~20,000 crore and was sent to the National Company Law Tribunal in 2018. State Bank of India (SBI) has ~12,000 crore of corporate guarantees given by Aircel’s Malaysian promoter, Maxis. “The onus is on SBI to invoke the guarantees, but the bank has a difficult task in hand because Maxis has no operations in the country,” said a banking source.
Lenders to Aircel are looking at the option to invoke the corporate guarantees given by the former promoters of the wireless telephony company.
The firm had defaulted on debts of ~20,000 crore and was sent to the National Company Law Tribunal (NCLT) in 2018.
State Bank of India (SBI) has ~12,000 crore of corporate guarantees given by Aircel’s Malaysian promoter, Maxis.
“The onus is on SBI to invoke the guarantees but the bank has a difficult task in hand ahead because Maxis has no operations in the country,” said a banking source.
Maxis, a multi-billion-dollar conglomerate in Malaysia, owned 74 per cent in Aircel while the rest was owned by the promoters of Apollo Hospitals, the Reddy family.
After it shut down operations in 2017, the company was sent for debt resolution by lenders and UV ARC emerged as its highest bidder with an offer of just ~150 crore to the lenders.
The matter is pending in the Supreme Court after UV ARC and the lenders moved the highest court, appealing against the National Company Appellate Law Tribunal (NCLAT) April order, which said Aircel must also clear its spectrum dues worth ~12,389 crore to the Department of Telecommunications (DOT) before the UV ARC takeover.
In several cases under the Insolvency and Bankruptcy Code (IBC), lenders have retained the guarantees with them so as to recover the dues from former promoters by selling their personal assets.
In most of the cases, banks seldom receive any funds because promoters don’t keep any assets under their name.
When contacted, an SBI spokesperson said: “It is the policy of the bank not to comment upon an individual account and its treatment.”
After the debt resolution, lenders are planning to take action against the former promoters, who had given their guarantees. “In many IBC cases, former promoters have walked free after their companies have been sold to the highest bidder. With a Supreme Court decision in their favour, lenders are planning to invoke the guarantees given by promoters,” said a corporate lawyer.
“It is still unclear on the invoking of personal guarantees of bankrupt companies before December 2019 (when the government came up with a notification to invoke personal guarantees and was challenged in the Supreme Court),” he said.