Debt-laden Indian operator Aircel is set to have a bankruptcy plea heard by authorities on 8 March, after finally giving-up on attempts to strike a deal with creditors on debt restructuring.
The Economic Times reported the case will be heard in Mumbai by the National Company Law Tribunal after Aircel filed for bankruptcy last week.
In a statement, Aircel – majority owned by Malaysia-based operator Maxis – blamed its issues on “troubled times in a highly financially stressed industry” caused by “intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses.”
It added the filing was not a liquidation proceeding but a “process to find best possible resolution” and its application was “not the end” but “a beginning of our great future ahead.”
The application comes after the operator failed to come to an agreement with creditors on repayment of its growing debt pile.
In a report on the company’s initial hearing in the Hindustan Times, Aircel’s senior counsel Janak Dwarkadas said the operator and its two subsidiaries had debt of over INR500 billion ($7.7 billion) comprised of money owed to financial lenders and operational debt.
If the court accepts its bankruptcy plea, it will appoint an interim resolution professional to try and save the company. If this fails, it will be liquidated.
Aircel’s bankruptcy filing comes five months after a proposed merger with fellow operator Reliance Communications was called off due to “uncertainties” and amid continued cut-throat competition in the Indian telecommunications sector sparked by the entry of Reliance Jio in 2016.
In December 2017, reports surfaced stating Maxis was prepared to inject $1.1 billion into Aircel to revive its fortunes. However, this was said to be conditional on it agreeing a debt restructuring plan with creditors.