The association of asset reconstruction companies (ARC) has written to the Reserve Bank of India (RBI) seeking clarity on why the regulator has rejected the resolution plan for bankrupt telecom operator Aircel Group, said a person aware of the development.
The central bank has rejected the resolution plan submitted by UV Asset Reconstruction Co Ltd for acquiring assets of Aircel citing that the plan does not conform to the guidelines of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, said the person requesting anonymity. The reserve bank has also rejected other insolvency resolution plans submitted by UV ARC besides that for Aircel, the person said.
“We have written to the RBI. We want to know the reason for rejecting the plan of UV ARC because IBC allows asset reconstruction companies to participate in resolution process…IBC was introduced much later than Sarfaesi and it overrides all other previous acts,” the person said.
While the Insolvency and Bankruptcy Code (IBC) was introduced in 2016, the Sarfaesi Act has been in place since 2002.
The National Company Law Tribunal had in June approved a Rs6,630 crore bid by UV ARC for Aircel. UV ARC has also emerged as the highest bidder for another bankrupt telco, Reliance Communications Ltd. Both resolution plans have been challenged by the department of telecommunications (DoT) as it fears not recovering its dues, including adjusted gross revenue (AGR), from the resolution of these bankrupt telcos.
The DoT has been classified as an operational creditor in the resolution processes of Aircel and RCom, implying that the government may recover little or next to nothing. As per IBC, financial creditors—in this case the banks—have the greater right on recovery proceeds and get preference over operational creditors.
While Aircel has a liability of Rs12,289 crore in AGR dues to the government, RCom owes Rs25,199 crore, including spectrum usage charges and licence fees. Live Mint