Gurugram-based telecom major Aircel which filed for bankruptcy last week, has approached the Mumbai-bench of NCLT (National Company Law Tribunal) to initiate the proceedings. We take a look at three key takeaways.
Gurugram-based telecom major Aircel which filed for bankruptcy last week, has approached the Mumbai-bench of NCLT (National Company Law Tribunal) to initiate the proceedings. Founded in 1999, Aircel is the sixth largest mobile service provider in India with a subscriber base topping 84 million in December-17. The company cited disruption from new player, unsustainable debt and fierce competition for the extreme step. Notably, the company has a debt-pile of over Rs 50,000 crore, and has asked for the appointment of an interim resolution professional (IRP). The company said in a statement that it has suffered significant negative business and reputational impact due to unsustainable debt and increased losses. The statement went on to say that post detailed discussions with the financial lenders and shareholders, Aircel was unable to reach any common agreement with respect to the restructuring of its debt and funding. We bring you key takeaways from Aircel’s bankruptcy proceedings.
Court to hear petition on March 8
Senior counsel Janak Dwarkadas told the Mumbai bench that Aircel wishes to continue essential services. Further, he pointed out that around 6,000 employees haven’t got their dues for February, while seeking urgent hearing of the case. The court is scheduled to hear the petition on March 8. Out of the total debt of Rs 50,000 crore; Rs 15,000 crore belongs to financial creditors while Rs 35,000 crore is attributable to operational creditors.
Repayment plan if court accepts plea
According to the latest rules, if the court accepts Aircel’s bankruptcy plea, the company would be placed under an IRP (Insolvency Resolution Professional), who will have a maximum of 270 days to work out a repayment plan. However, if the company fails to come out with an appropriate plan, Aircel will be subjected to liquidation for repayment of dues.
Unpaid staff and distributors
According to news reports, Aircel has failed to make payments to many of its distributors. The distributors have also reportedly demanded Aircel to compensate them for the unsold inventory. Meanwhile, Aircel says that says that the CIRP is not a proceeding for liquidation, rather it should be seen as finding the best possible solution for the after keeping the best interests of vendors, distributors and employees in mind, and to protect and preserve the value of the company.