Licence cancellation to kill RCom resolution: Deloitte

Deloitte, the resolution professional for Reliance Communications (RCom), on Thursday told the bankruptcy court in Mumbai that the troubled telco’s insolvency process will go kaput if the telecom department terminates its telecom licence due to unpaid statutory dues.Deloitte has informed the National Company Law Tribunal (NCLT), Mumbai, that DoT is unlikely to renew RCom’s licence on July 27 when they expire, and if that happens, there will be nothing left in the carrier to sell, a lawyer aware of the development told ET.If the licence is cancelled, then RCom will have to surrender its most valued asset – spectrum – which, in turn, will mean no recovery for its 53 lenders.According to the lawyer, senior advocate Ravi Kadam has informed the court on behalf of the resolution professional (RP), that without license, the entire corporate insolvency resolution process (CIRP), will fall apart.The court has directed that a notice be sent to DoT and listed the matter for Tuesday, July 13, the lawyer said.The bankrupt telco’s urgent plea comes after DoT rejected RCom’s request to renew its telecom licence for another 20 years, unless the telco paid up its Rs 26,000-crore adjusted gross revenue (AGR) dues, as ET reported earlier this week.This followed the RP’s communication to the department that as per Insolvency and Bankruptcy Code (IBC), RCom’s dues come under a moratorium and it does not have to pay them.Earlier owned by industrialist Anil Ambani, RCom owns a pan-India telecom licence and holds airwaves in the 850 MHz band in 14 of India’s 22 telecom circles. Under the IBC proceedings, RCom’s committee of creditors in March 2020 had cleared a resolution plan that would see asset reconstruction firm UVARCL pick up the company’s spectrum for Rs 12,760 crore, staggered over 12 years, with Rs 5 crore of upfront cash payment. That is a big chunk of the Rs 20,000-23,000 crore expected from the sale of assets in RCom and its two units – Reliance Telecom and Reliance Infratel. Besides spectrum, the assets on sale include towers, fibre, enterprise business, data centres, and land.Lenders’ claims under IBC had totalled over Rs 57,000 crore. But DoT, as an operational creditor, stands to recover only a fraction of its dues if and when the asset monetisation takes place under IBC.The resolution plans for RCom and Reliance Telecom are yet to be cleared by NCLT. The tribunal though has cleared the sale of towers under Reliance Infratel to a Reliance Jio unit for nearly Rs5,000 crore, which though hasn’t been implemented yet.The spectrum sale under the resolution pan is separately facing legal scrutiny with DoT challenging that, without the payment of statutory dues. A similar case of another insolvent telco, Aircel has reached the Supreme Court after National Company Law Appellate Tribunal (NCLAT) said spectrum can’t be transferred without the payment of statutory dues.

from Economic Times https://ift.tt/2UvJ6zd