NEW DELHI: Unable to withstand the disruption caused by Reliance Jio, Aircel along with its units Aircel Cellular and Dishnet Wireless on Wednesday said it has filed for bankruptcy under Section 10 of the Insolvency and Bankruptcy Code, 2016 in the National Companies Law Tribunal (NCLT), Mumbai.
Aircel said it has been facing difficult times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a ‘new player’, legal and regulatory challenges, high level of unsustainable debt and increased losses. This has caused significant negative business and reputational impact on the company, it said. Aircel has a debt of about `19,000 crore, including deferred spectrum payments.
The bankruptcy move comes in the backdrop of Aircel’s failure to merge with Anil Ambani-led Reliance Communications.
Even after detailed discussions with the financial lenders and shareholders, the company could not reach consensus with respect to restructuring of its debt and funding, Aircel stated. It added that despite discussions and invoking of a strategic debt restructuring scheme in January 2018 pursuant to the then guideline of the Reserve Bank of India (RBI), no agreement could be reached. “Under current circumstances, especially after the 12 February 2018 RBI guidelines, the company believes resolution process under the code is an appropriate recourse.”
Aircel emphasised this would be in the best interest of everyone (vendors, distributors, employees etc) to protect and preserve the value of the company and manage the operations.
As per rules, the operator will be placed under a court-appointed insolvency resolution professional, who will get 180 days that can be extended by another 90 days to work out a repayment plan. If no plan is agreed during the 270-day period, the company will be declared bankrupt and will be liquidated.
According to Trai data, Aircel has over 85 million subscribers across 17 telecom circles. It had recently shut its services in six circles. The fate of its around 500 employees plus vendors and distributors is also uncertain now. The company has asked for cooperation from all its stakeholders including the vendor fraternity and channel partners during the insolvency process.