Aircel seeks urgent appointment of an IRP by NCLT citing unpaid salaries, utility bills

Yesterday, telecom services firm Aircel approached the National Company Law Tribunal (NCLT) seeking an urgent hearing to appoint an Interim Resolution Professional (IRP). "There is serious urgency to hear the matter as the company wants to continue essential services. We need certain economic safeguards as the company's employees [have been] unpaid since February. One [also] needs to pay electricity and water bills to continue services," Janak Dwarkadas, senior counsel appearing for Aircel, told The Hindu. Along with advocate Zal Andhyarujina and law firm J. Sagar Associates, Dwarkadas is advising Aircel in the bankruptcy matter.

The senior counsel added that Aircel has outstanding debt of Rs 50,000 crore, of which Rs 15,000 crore is due to financial creditors and the remaining is to be paid to operational creditors. The latter include tower companies, system integrators, IT firms and telecom equipment makers. That apart, the teleco also owes dues to vendors such as the security agency, housekeeping staff and distributors. After hearing the matter, the Mumbai bench, headed by M.K. Shrawat, adjourned the petition to March 8.

To remind you, Aircel spent much of last year exploring a merger with Reliance Communications Ltd - which fell through due to regulatory and legal uncertainties - followed by unsuccessful attempts to restructure its debt. The country's sixth largest telecom operator finally filed for bankruptcy last week. In a statement, it blamed the intense competition following the disruptive entry of a new player along with legal and regulatory challenges, high level of unsustainable debt and increased losses. Incidentally, Aircel is the fourth telecom firm to wind up after billionaire Mukesh Ambani-led Reliance Jio debuted in September 2016 and unleashed a price war.

Once the IRP is appointed and assumes control of the defaulting company, a creditors committee will be formed to look into the interests of lenders and other parties involved. If a feasible solution to the default issue cannot be arrived at within 180 days -which may be extended to 270 days - a liquidator will get appointed.

Meanwhile, frustrated Aircel customers are moving court. "Over 25 lakh subscribers have been affected by the sudden stoppage of service by the cellular company. This is highly unethical and should have been viewed seriously by the government and TRAI. But so far they have failed to act," PIL-petitioner Saravanakumar submitted to the Madras High Court. He added that services came to a standstill on February 21, due to which people were facing difficulties in availing welfare and government schemes, including LPG connections, as the mobile numbers linked with such services were not working. Through a statement issued by Aircel, the petitioner learnt that out of 9,000 mobile phone network towers owned by the firm, 6,500 towers could not be operated due to rental default on part of Aircel, which was affecting its services in the state.

Yesterday, the first bench of Chief Justice Indira Banerjee and Justice Abdul Quddhose issued a notice to the telecom ministry and the Telecom Regulatory Authority of India (TRAI) to file their counter. The petitioner also sought a direction from the court to direct Aircel to restore mobile portability services, enabling its existing customers to "port their numbers to other network providers". The matter has been adjourned for further hearing on March 19.