Aircel, Rcom Might Resort to Liquidation After NCLAT Decision: Report

Last week, The National Company Law Appellate Tribunal (NCLAT) announced its verdict in the Aircel vs the Department of Telecommunications (DOT) case. The verdict had a direct effect on the resolution plans of Aircel and Reliance Communication Ltd. (RCom)

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The resolution plan of UV Asset Reconstruction Company Ltd. (UVARCL) for Aircel was approved in June 2020.  However, according to an IANS report, experts believe that NCLAT’s decision has rendered the plans useless, thus pushing the company towards liquidation. The company will be filing for liquidation for Rs 18,000 crore owed to the lenders with zero reimbursements.

Banking Institutions Will Incur The Most Loss

The Banking institutions will suffer a huge loss because of the decision. First on the list is the State Bank of India (SBI) with a loss of Rs 5,000 crore followed by Bank of Baroda, Canara Bank, Punjab National Bank and China Development Bank.

UVARCL also has biddings on assets of RCom and RTL which primarily include spectrum and real estate.

NCLAT has said in the last week’s judgement that the company can use or transfer spectrum only after the government dues are cleared. Further, the ruling also said that Spectrum cannot be treated as a “security” and the government will be viewed as an operational creditor.

DoT being an operational creditor cannot claim any amount towards AGR dues before the financial creditors. Aircel and RCom are indebted to pay Rs 12,389 crore and Rs 26,000 crore respectively to the DoT as AGR dues.