In an interim step, the Supreme Court decided Friday that the bankruptcy appellate tribunal will decide whether banks can sell bankrupt telecom companies’ right to mobile phone spectrum in the insolvency proceedings. That’s a change from the previous order, which empowered the lower bankruptcy court. Friday’s ruling removes one layer of appeals, which could expedite a final decision on the issue.
Any ruling by a lower court, followed by possible appeals up to the top court, may take from six months to more than a year, Shally Bhasin, a partner at Delhi-based law firm Agarwal Law Associates, said before Friday’s hearing. “Neither the banks nor the telecom sector can afford such delays. It frustrates the spirit of the bankruptcy law that mandates a time-bound resolution of insolvencies,” she said.
Bad loan mess
The bankruptcy tribunal had approved a plan to sell the assets of Aircel Ltd. group companies
to help banks recover about 190 billion rupees ($2.6 billion) of debt. Another proposal to sell the assets of Reliance Communications Ltd. to reclaim about 230 billion rupees is pending.
The banks were seeking larger amounts. A group of mostly state-owned lenders claimed about 587 billion rupees from Aircel firms -- formerly controlled by Malaysian billionaire T. Ananda Krishnan -- and some 1.2 trillion from collapsed Reliance companies, which used to be controlled by tycoon Anil Ambani. The telecom department claimed another 120 billion rupees from Aircel and 250 billion from RCom in fees for airwave permits.
The telecom department challenged any sale before its dues are cleared, a view opposed by the corporate affairs ministry. Lenders contested the telecom ministry’s petition in court, saying without sale of airwaves rights the bankruptcy resolution would fail.
“Ministries of telecommunications and corporate affairs must sort the issues at their levels so that the sanctity of bankruptcy resolution process remains intact,” Agarwal Law’s Bhasin said.
(With assistance from Bhuma Shrivastava.)
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