NCLAT Judgement: RCom and Aircel heading for liquidation, results Rs 60,000 Cr NPA for Banks
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New Delhi: The National Company Law Appellate Tribunal (NCLAT) judgement in the Aircel Vs. Department of Telecommunications (DOT) case last week has cast a shadow on the resolution plans of Aircel and Reliance Communication Ltd. (RCOM) resolution plans.
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 recoveries for Rs 18,000 crore owed to the lenders, according to experts, as reported by IANS.
State Bank of India of (Rs 5,000 crore) followed by Bank of Baroda, Canara Bank, Punjab National Bank and China Development Bank, will bear the biggest loss.
NCLAT has stated that spectrum can be sold under the insolvency process only after the government dues are cleared in its last week's judgment.
It 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 case of Ghanashyam Mishra and Sons Private Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd, the Supreme Court has held that operational creditors can not claim any amount over and above the Resolution Plan as approved by the Committee of Creditors (COC).
It is clear that DoT as an 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. 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.
Liquidation of RCOM and RTL will result in a loss of Rs 40,000 crore to 38 Lenders- including Chinese Banks led by China Development Bank (Rs 9,000 crore), SBI ( Rs 3,000 crore), and LIC (Rs 3,700 crore).
The Committee of Creditors for Aircel and RCOM is going to appeal before the Apex court and vigorously fight for favourable judgement, said sources linked to them.
(With IANS inputs)