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Aircel, RCom Lenders Could Defy NCLAT Order on Spectrum
Lenders telco majors Aircel and Reliance Communications are planning to challenge the ruling of company law tribunal NCLAT post the spectrum sale as they are worried that it would lead to NPAs of around 
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 used without payment of requisite dues that cannot be wiped off by triggering CIRP (Corporate Insolvency Resolution Process) under I&B (Insolvency and Bankruptcy) Code'.
UV Asset Reconstruction major (UVARCL) has emerged as a successful bidder for the spectrum assets of the telcos Aircel and Reliance Communications. It has also offered to pay 150 crore upfront for the Aircel spectrum and another 6,630 crore in the next five years to the financial creditors.
Furthermore, the firm has offered to pay about 14,000 crore to take over spectrum holding of Reliance Communications as well as its subsidiaries.
Alongside, the NCLAT judgement would 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 percent of lenders and is awaiting approval of NCLT, Mumbai since March 2020.
According to the experts and sources working with a committee of creditors, the order is expected to block transfer of Aircel and RCom spectrum to UVARCL and leave Indian and foreign banks with non-performing assets of close to 60,000 crore as claimed by the lenders.
One of the sources privy to the development says, '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.'
Moreover, the experts believe that based on the NCLAT Judgement, the resolution plan of UV Asset Reconstruction Company (UVARCL) for Aircel, which was approved in June 2020, would be unworkable and Aircel might be heading for liquidation, resulting in zero recovery for 18,000 crore owed to the lenders.
The biggest loss will be for State Bank of India of 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.
Aircel and RCom owe DoT 12,389 crore and 26,000 crore respectively to the DOT as adjusted gross revenue dues.
Accoring ot sources, “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.”
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