Story of every home?
The politics played by the two bothers in the house of LateDhirubhai Ambani, when looked at the bare basics, are no different than whathappens in almost every home in the world.
Consider the scenario. A younger brother is working hard toset his business in order and approaching third-parties to purchase his ailingbusiness.
The elder brother notices that if his younger brother isable to sort this mess and able to stand on his feet, then it could lead to astrong competition in the future from within the family only.
The elder brother, then, extends his helping hand even claiminga right of first purchase and stops the deal with the third-parties dead intracks.
Once, the third-party bailout is out of question then theelder brother turns on his word and leaves the younger one holding the bag, andhaving to fend for himself from scratch.
Mukesh’s dream from a long time?
The elder brother, Mukesh Ambani always had dreams to enter telecombusiness but was stopped by one reason or other.
His venture Jio had to wait till 2016 to enter the telecombusiness.
Since business acumen flows in the veins of Ambani family,Mukesh offered something innovative and valuable for free and the whole nation– from a small shop owner to housewives – was hooked.
This was achieved by free 4G data plan with unlimitedcalling, video content over OTT, and other features.
Anil was left holding the bag
Once the efforts of Anil were derailed, the state of Anil’scompany Rcom went from bad to worse.
Spectrum is the only valuable asset
In the current state, Anil’s company Rcom only has spectrumwhich is worth (big) money and the sale of these can be used to pay theinvestors and lenders whose money has been stuck in the failed business.
Also, together with Rcom, another company Aircel is alsoinvolved and when both the companies are considered together, the arrears arein the range of Rs 60,000 crore.
On Aircel, the dues are about Rs 18,000 crore and on Rcom,the dues are about Rs 40,000.
DoT too wants its dues
Amid the hue and cry by the creditors, the government toowants its dues. The Department of Telecom (DoT) is an operational creditor andcomes later in the queue – behind the financial creditors.
However, if the DoT’s dues are cleared first then there willbe nothing left for the financial creditors, and the latter will be approachingthe Supreme Court regarding this.
NCLAT’s decisions
However, the National Company Law Appellate Tribunal (NCLAT)rules otherwise claiming on April 13, 2021 that without payment of “requisitedues” the spectrum cannot be utilised. Further, these dues cannot beextinguished by “triggering CIRP (Corporate Insolvency Resolution Process)”.
Investors and lenders
Understandably, the investors and lenders are a worried lotand will challenge this ruling by NCLAT.
Further, there is a bidder who proposes to take care of allthe financial issues.
UV Asset Reconstruction Company (UVARCL) has won as thesuccessful bidder and it proposes an advance of Rs 150 crore plus a payment ofRs 6,630 crore spread over the next five years.
Further, Rs 14,000 crore is being offered for the spectrum.
However, people close to the creditors (wishing to remainanonymous) express fear that such an arrangement will leave the creditors –Indian and foreign banks – with non-performing assets of around Rs 60,000crore. And this is the amount claimed by the creditors.
Bad news for DoT?
As valid as everyone must be in asking for their money back,still, DoT seems to be in a tight spot.
One of the sources cited a Supreme Court ruling where it wasruled that the operational creditors cannot claim any amount over and above theresolution plan approved by the Committee of Creditors (COC). This precedent isof Ghanashyam Mishra and Sons Private Ltd versus Edelweiss Asset ReconstructionCompany Ltd.
Future?
Thus, we see a mess – family and financial – of a high-leveland every party will attempt to salvage whatever they can from these sunkenships.
For now, eyes are on the appeal in Supreme Court which isbeing planned by financial creditors to challenge the ruling of NCLAT.