Troubled telecom operator Aircel Ltd, which has filed for bankruptcy, approached the Mumbai bench of the National Company Law Tribunal (NCLT) for the appointment of an interim resolution professional (IRP) on Monday.

“The company has filed for bankruptcy along with its two subsidiaries since the company has a debt of over Rs50,000 crore," said senior counsel Janak Dwarkadas, who is appearing for the company.

“Out of that, Rs15,000 crore is due to financial creditors, while Rs35,000 crore to operational creditors."

According to the counsel, there is serious urgency to hear the matter because the company wants to continue essential services. Also, there are some 6,000 employees who haven’t got their dues for February and need to be take into account, the counsel said.

“An IRP is appointed after an application under Section 10 is made to the tribunal. Immediately thereafter, moratorium period is declared which means that all the claims (including claims by tax authorities) against Aircel can only be made to the resolution professional," said Ashish K. Singh, managing partner of law firm Capstone Legal. After hearing the matter, justice M.K. Shrawat adjourned the matter to 8 March.

Aircel, one of India’s oldest telecom firms, filed an application along with its units, citing high unsustainable debt, price wars, and legal and regulatory challenges.

At the time of filing insolvency, the telecom operator had said that it filed the application under Section 10 of the Insolvency and Bankruptcy Code (2016) for undertaking corporate insolvency resolution process for Aircel Cellular Ltd, Dishnet Wireless Ltd and Aircel Ltd. The company initiated the process to file for bankruptcy on 28 February.

The company said it filed for bankruptcy to find the best possible resolution that would be in the best interest of its vendors, distributors and employees.

“The board of directors acknowledged that it has been facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses," it said, adding that these factors caused significant business and reputation impact on the company.

Aircel has requested its suppliers and partners to continue services as it strives to provide uninterrupted customer service. Currently, Aircel has spectrum in 900MHz, 1800MHz and 2100MHz bands.

Aircel and Dishnet Wireless, collectively known as the Aircel Group, had on 1 December 2017 informed the Telecom Regulatory Authority of India (Trai) that it intended to surrender licences in Gujarat, Maharashtra, Haryana, Himachal Pradesh, Madhya Pradesh and Uttar Pradesh (West), following which it shut services in these circles from 31 January.

On 22 February, Aircel informed Trai that it is undergoing deep financial stress and has been severely impacted by tower service provider GTL Infra shutting off as much as a third of its total sites in different circles across the country. Subsequently, the regulator asked the troubled telecom operator to give time to its subscribers to shift to other networks.

Law firm J Sagar Associates along with senior counsel Janak Dwarkadas and Zal Andhyarujina are advising Aircel in the bankruptcy matter.

According to Sandeep Singhi, managing partner of corporate and dispute resolution firm Singhi & Co, under the bankruptcy laws, under the waterfall mechanism debt repayment will happen in the following order: secured financial lenders along with workers; employees; unsecured financial creditors and operational creditors.