Bankruptcy Code tweak to lift freeze on idle waves unlikely
Insolvency and Bankruptcy Code (IBC) to lift the moratorium on idle spectrum in insolvency resolution cases involving telecom companies, people familiar with details said. The government last month tweaked the IBC rules to exempt production and revenue-sharing contracts, exploration licences and mining leases of insolvent petroleum firms from moratorium, raising expectations of a similar dispensation for the telecom sector even ahead of the proposed Telecom Bill.
The draft Telecom Bill proposes provisions that will enable the government to regain control of idle airwaves of insolvent telecom operators. Some experts, however, favour a final call on this issue only after the Supreme Court gives its verdict in the Reliance Communications and Aircel cases.
«The (SC) ruling is important, as it could settle the issue of the fate of leased/third-party assets in an insolvency case (involving telecom firms),» said one of the experts. «A final decision by the government will be made in due course.» The issue of moratorium on spectrum came to the fore after the department of telecommunications (DoT) had raised objections to the insolvency resolution plans involving Aircel and Reliance Communications, which were cleared by their committees of creditors.
These companies owed the government Rs 37,588 crore in spectrum dues. The DoT held that once a company defaults on spectrum payment, the government has the right to take the airwaves back in accordance with the licence agreement.
In April 2021, before the cases landed in the top court, the National Company Law Appellate Tribunal had ruled that spectrum could form a part of an insolvency resolution process only after the bankrupt firm clears the government dues. The IBC provides that
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