Aircel, RCom face liquidation, banks may take Rs 60K cr hit
The National Company Law Appellate Tribunal (NCLAT) ruling of last week in the Aircel Vs. Department of Telecommunications (DOT) case has cast a shadow on the resolution plans of Aircel and Reliance Communication (RCOM).
According to experts, based on the NCLAT Judgement, the Resolution Plan of UV Asset Reconstruction Company Ltd. (UVARCL) for Aircel, which was approved in June 2020, will be unworkable and the company will be heading for liquidation, resulting in zero recovery for Rs 18,000 crore owed to the lenders.
The biggest loss will be State Bank of India of Rs 5,000 crore followed by Bank of Baroda, Canara Bank, Punjab National Bank and China Development Bank.
UVARCL is also the successful bidder for the assets of RCOM and
RTL, which primarily include spectrum and real estate.
NCLAT in its last week's judgment has stated that spectrum can be sold under the insolvency process only after the government dues are cleared. It has also held that Spectrum cannot be treated as a 'security interest' by the lenders.
However, the Tribunal held that the Government is an operational creditor.
In the matter of Ghanashyam Mishra and Sons Private Ltd. Vs. Edelweiss Asset Reconstruction Company, the SC has held that operational creditors can not claim any amount over and above the Resolution Plan as approved by Committee of Creditors (COC).
It is clear that DoT as operational creditor can not recover any AGR dues ahead of financial creditors. Aircel and RCOM owe Rs 12,389 crore and Rs 26,000 crore respectively to the DOT as AGR dues.
The NCLAT judgement will also have an impact on the debt resolution of Reliance Communication Ltd (RCOM) and Reliance Telecom Ltd (RTL) as well.