July 02, 2019

DoT Rejects Aircel Resolution Plan Citing Insufficient Provision Of Funds To Cover For Its License And Spectrum Related Dues

[ By Bobby Anthony ]


The resolution proposal cleared by the lenders of bankrupt telecom company Aircel has been rejected by the Department of Telecommunications (DoT).

DoT has stated that the Rs 16.50 crore which was earmarked for all operational creditors, including the government, is insufficient to cover for its license as well as spectrum related dues.

The government counsel told the National Company Law Tribunal (NCLT) recently that the Rs 16.50 crore which has been earmarked for all operational creditors has no “specific provision” for DoT.

It may be recalled in this connection that DoT had filed claims worth some Rs 10,000 crore, of which only Rs 2,000 crore was approved by Aircel’s resolution profession Deloitte.

However, Deloitte’s counsel argued that spectrum license was the most important asset of the telecom company without which no asset monetization plan would work out.

Earlier, the NCLT's Mumbai bench had asked DoT to file an affidavit by July 22 to which Aircel's resolution professional would have to respond by July 28. The decision on the resolution plan would be taken on July 30.

Incidentally the DoT’s response came after the NCLT asked the government to study the resolution plan made by Aircel’s resolution professional on how it could recover its dues, and then get back to the court.

The DoT is against resolution professionals being allowed to sell spectrum under the insolvency process, arguing that airwaves are a natural resource which belongs to the government and is merely leased to telecom operators with a right to use them for 20 years.

As a matter of fact, DoT wants bankrupt telcom companies to return their airwaves to the government so that they can be auctioned.

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