RCom resolution plan approved, highest-ever recovery of dues in telecom

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SME Times News Bureau | 04 Mar, 2020
The Committee of Creditors (COC) has approved the Reliance Communications (RCom) resolution plan under which the lenders will receive 70 per cent or Rs 23,000 crore of their total outstanding dues of Rs 33,000 crore.

This is the highest-ever recovery of dues by financial creditors in the telecom sector which has seen the exit or shut down of 11 out of 12 telcos since 2012.

The Resolution plans of Reliance Communication (RCOM), Reliance Telecom Ltd (RTL), and Reliance Infratel Ltd (RITL) have been approved with an absolute majority (100 per cent) by the lenders at the COC meeting, as against the mandatory requirement of 66 per cent.

The 38 lenders of RCOM will recover over 70 percent or Rs 23,000 crore of their outstanding of Rs 33,000 crore of secured debt.

The Resolution Professional will file the plan with the NCLT on Thursday. Jio and UVARC were the highest bidders for RCOM assets at the COC meeting held on January 13, 2019.

Jio had bid Rs 4,700 crore for the tower and fibre assets of RITL. The UVARC had bid Rs 14,000 crore for spectrum, real estate assets as well as the enterprise and datacentre businesses, held in RCom and RTL.

In addition, the lenders will clawback the priority payments of Rs 4,300 crore made to Chinese lenders for Rs 1,300 crore and Indian lenders of Rs 3,000 crore.

The bidders have committed to pay 30 per cent of the proceeds of Rs 7,500 crore within 90 days. The loans of Chinese lenders will reduce by nearly 65 percent by Rs 8,000 crore from Rs 12,000 crore to Rs 4,000 crore.

Apart from the highest-ever recovery of dues by financial creditors in the telecom sector, this would also rank amongst the highest recoveries by way of Corporate Insolvency Resolution Process (CIRP) approved by the National Company Law Tribunal (NCLT) across sectors, as per data published by the Insolvency and Bankruptcy Board of India (IBBI).

In the case of Bhushan Steel and Essar Steel, the recovery to lenders were 63 and 60 per cent respectively, as per IBBI website.

Of the 2,542 cases admitted under IBC since December 2016, only 156 plans have been approved, 587 went to liquidation and 1,497 CIRPs are still on-going.

The recovery of financial creditors in plans approved is around 41 per cent and the overall recovery is less than 10 per cent.