Lenders of debt-ridden telecom firms Aircel and Reliance Communications are planning to challenge the ruling of company law tribunal NCLAT over spectrum sale as they fear it will lead to NPAs of around Rs 60,000 crore claimed by them.
The National Company Law Appellate Tribunal (NCLAT) in its order dated April 13 had ruled that the "spectrum cannot be utilized without payment of requisite dues which cannot be wiped off by triggering CIRP (Corporate Insolvency Resolution Process) under I&B (Insolvency and Bankruptcy) Code".
UV Asset Reconstruction Company (UVARCL) has emerged as a successful bidder for spectrum assets of Aircel and Reliance Communications. It has offered to pay Rs 150 crore upfront for the Aircel spectrum and another Rs 6,630 crore over the next five years to the financial creditors.
The firm has offered to pay around Rs 14,000 crore for acquiring spectrum holding of Reliance Communications and its subsidiaries. The NCLAT judgement will also have an impact on the debt resolution of RCom and Reliance Telecom (RTL) as well. The resolution plan of RCom and RTL was duly approved by 100 per cent of lenders and is awaiting approval of NCLT, Mumbai since March 2020.
According to the experts and sources working with a committee of creditors, who did not wish to be named, the order may block transfer of Aircel and RCom spectrum to UVARCL and leave Indian and foreign banks with non-performing assets of around Rs 60,000 crore as claimed by the lenders.
"Spectrum is the only main asset that both Aircel and RCom have. The DoT is an operational creditor and comes after the financial creditor for getting the claim. If Aircel and RCom will have to first clear dues of the DoT then financial creditors will have nothing to recover. Financial creditors are planning to challenge NCLAT ruling before the apex court," one of the sources privy to the development said.
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 Aircel will be heading for liquidation, resulting in zero recovery for Rs 18,000 crore owed to the lenders.
The biggest loss will be for State Bank of India of Rs. 5,000 crore followed by Bank of Baroda, Canara Bank, Punjab National Bank and China Development Bank, according to the sources.
No immediate comments were received from SBI which is a lead lender to Aircel. One of the sources cited the Supreme Court ruling in the matter of Ghanashyam Mishra and Sons Private Ltd versus Edelweiss Asset Reconstruction Company Ltd where the apex court has held that the operational creditors cannot claim any amount over and above the resolution plan as approved by Committee of Creditors (COC).
Aircel and RCom owe DoT Rs 12,389 crore and Rs 26,000 crore respectively to the DOT as adjusted gross revenue dues. "Liquidation of RCOM and RTL will result in loss of Rs 40,000 crore to 38 Lenders, Chinese Banks led by China Development Bank will lose Rs 9,000 crore, SBI - Rs 3,000 crore, and LIC Rs 3,700 crore," according to the sources.
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