The National Company Law Tribunal (NCLT) has finally agreed to the insolvency resolution plan for Aircel that will see UV Asset Reconstruction Co. Ltd (UVARCL) take over the operator’s assets, said people with knowledge of the matter.
This marks the end of a two-year process that was the first of its kind in the telecom sector and will likely see among the lowest recoveries for lenders among major bankruptcy cases in India, they said.
“NCLT approved the resolution plan on Tuesday,” said a person directly involved in the case. While Aircel, owned by Malaysia’s Maxis, may have narrowly escaped liquidation, its financial creditors may recover only 10-15% of the loans they extended, another person directly familiar with the case said.
Aircel’s resolution professional Deloitte had verified claims to the tune of Rs 20,000 crore, which means recoveries for lenders of about Rs 2,000 crore-Rs 3,000 crore of the money loaned to the telco. But according to sources, the plan was to recover about Rs 5000 crore -Rs 6000 crore.
Aircel's lenders include State Bank of India, Bank of Baroda, Punjab National Bank, China Development Bank Corp. and Canara Bank.
UVARCL is to take over the business as a going concern and run the smaller units such as the bulk SMS and enterprise divisions, according to the plan okayed in May 2019. The rest of the assets were to be sold with that money going to the lenders. At the time, recovery was estimated at 12-36 months.
Aircel and its units Dishnet Wireless and Aircel Cellular , which ran mobile services across India and was particularly strong in the south, stopped operations in March 2018.
It voluntarily filed for bankruptcy–the first in the sector to do so--after coming under pressure due to intense price competition after the entry of Reliance Jio Infocomm and burdened by debt of Rs26,000 crore taken to acquire airwaves and fund expansion.
The resolution professional had received claims worth Rs 20,000 crore from lenders and claims for a similar amount from operational creditors.
