Lenders Discuss Option to Invite Fresh Bids for RCom Assets with Deloitte

People familiar with the RCom case said that a consortium of lenders have approached the RP Deloitte. The consortium discussed whether inviting new bids for the bankrupt telco’s assets is an option.

Lenders to Find New Takers for RCom Assets

The DoT has refused to renew RCom's license which is expiring in July. As such, lenders fear an outcome not different from the Aircel case. In that case, the RBI stopped UVARCL from buying Aircel's spectrum during the resolution process. That case is still ongoing in the Supreme Court. The lenders of the telco believe that the RBI is unlikely to permit UVARCL buying RCom’s spectrum and other assets under a resolution plan.

In the Aircel case, RBI denied UVARCL permission to buy Aircel’s assets for flouting norms under the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act. The RBI decision came even after the National Company Law Tribunal (NCLT) had approved the Aircel resolution plan. According to the Sarfaesi Act, asset reconstruction companies cannot infuse equity into an insolvent company at the resolution stage.

A bank official aware of the matter said, "there are informal discussions among lenders over the viability of the resolution plans for RCom and its units, as they have been delayed beyond measure". They added that some lenders feel that they should put the bids out again. However, another person in the know said that a few bankers raised concerns over rebidding. "Some lenders had brought up the issue of rebidding and whether and how it could be done legally. There is also fear that such a step could create legal trouble from the existing buyers", the person said.

RCom's Resolution Plan Dragging On

RCom’s committee of creditors cleared the resolution plan in March 2020. Under this plan, UVARCL would have bought all assets, including spectrum, under RCom and Reliance Telecom. Also, Reliance Jio would have picked up the company’s towers housed under Reliance Infratel.

The CoC filed the plans in the NCLT soon thereafter. However, the NCLT has only cleared the tower sale to Jio; it has not cleared the transfer of the other assets to UVARCL yet.

What's more, Jio has approached NCLT with more concerns, which has delayed the tower sale further. As such, this delay is causing a rapid depreciation in the value of the assets, especially spectrum. Reliance Jio is expected to buy the towers for ₹5,000 crores.

Further, UVARCL will pick up RCom's spectrum for ₹12,760 crore. All in all, the resolution plan targets a total recovery in the ₹20,000-23,000 crore range. Lenders, however, claim ₹57,382 crore; this means that they will get around two-thirds of their claims. When RCom filed for bankruptcy, it had a debt of ₹46,000 crore, with 53 financial creditors.