According to the terms of loan resolution in the Insolvency and Bankruptcy Code (IBC), the first preference on recovery is to secured financial creditors, followed by unsecured financial creditors, and then operational creditors. Hence, claims by operational creditors may not be met with concrete recoveries, given the order of precedence.
Who all are losing their claims in Aircel Case?
Aircel, which faces about Rs 5,900 crore in claims from its operational creditors, owes 58 per cent of dues to tower company GTL group, while the owner of Paytm and Wipro have also sought to recover outstanding money for services provided to the bankrupt telecom operator. Claims from financial creditors of Aircel amount to about Rs 19,074 crore, with the State Bank of India having the biggest share at 38 per cent. According to the terms of loan resolution in the Insolvency and Bankruptcy Code (IBC), the first preference on recovery is to secured financial creditors, followed by unsecured financial creditors, and then operational creditors. Hence, claims by operational creditors may not be met with concrete recoveries, given the order of precedence.
- One97 Communications, which owns Paytm, is seeking Rs9.6 crore in operational dues, and Wipro has put in claims for Rs 158 crore. Several other tower and telecom companies such as Bharti Infratel, Reliance Infratel, Vodafone and Idea, have also made substantial claims as Aircel’s operational creditors.
- Legal experts in insolvency law say that these companies run the risk of losing money since L&T, an operational creditor, also did not receive the Rs 900 crore of claimed dues in the resolution of Bhushan Steel, instead having to pay Rs 1 lakh as penalty.
- According to the data collected by the resolution professional, Vijay Kumar Iyer, GTL has made a claim of Rs1,773 crore while GTL Infra structure claimed dues of Rs 1,704 crore — both totalling to Rs 3,477 crore.
- Ironically, GLT Infra had acquired around 17,500 towers of Aircel in mid-2010 for Rs 8,026 crore. At that time, it was estimated that GTL Infra would earn revenues of Rs 720 crore per year, with provisions for a 3 per cent annual escalation.
- Indus Tower, too, has made a claim of Rs 436 crore, while Bharti Infratel has claimed Rs 412 crore.
The IBC has been brought into force to provide relief to every lender but seems some lacunae is still being faced as the operational creditors are unable to avail the advantages of this legislation to recover their dues because of being the last one in the order of preference. This issue also needs to be considered and resolved quickly in order to provide relief to the operational creditors so that they do not incur losses even after the resolution of the defaulter company.
Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.