Supreme Court Aircel verdict to impact IBC recoveries for creditors in telecom, mining and infra companies

Legal experts say the verdict will also impact other IBC cases where insolvent companies owned rights to public assets.

• Supreme Court rules telecom spectrum can't be sold under IBC
• Verdict affects telecom, mining, infrastructure bankruptcy cases
• Lenders may face lower recoveries due to non-transferable assets

Did our AI summary help?

Creditors under the Insolvency and Bankruptcy Code(IBC) have received a fresh jolt by way  of a recent Supreme Court verdict, which could impact future bankruptcy cases involving companies from sectors such as telecom, mining, airline and Infrastructure.

On February 13, the apex court ruled that telecom spectrum is a sovereign natural resource and it cannot be treated as a private asset to be sold under the IBC.

The ruling implied that the Telegraph Act overrides IBC and telecom assets cannot be transferred to new buyers like in normal cases. If such premium assets cannot be transferred to new owners, the recoveries for lenders will see a major impact.

This particular case involved spectrum owned by some of the bankrupt telecom companies including Aircel, Videocon and Dishnet Wireless. The development assumes significance as the recovery rates for lenders in IBC cases is already low, at 30-35 percent of admitted claims.

Legal experts say the verdict will also impact other IBC cases where insolvent companies owned rights to public assets, including telecom and mining companies. It will also impact lenders in infrastructure sector insolvencies where the company holds public assets like toll contracts

“The Supreme Court’s verdict marks a watershed moment for insolvency jurisprudence, fundamentally reshaping creditor expectations under the IBC. By holding that telecom spectrum is a sovereign natural resource that cannot be treated as a transferable private asset, the court has effectively subordinated the IBC to the Telegraph Act in this domain. The consequence is profound: core value driving assets in telecom, and potentially in mining and infrastructure where public rights underpin operations, may no longer be freely transferred to resolution applicants,” said Alay Razvi, Managing Partner, Accord Juris.

Until now, the interpretation was that IBC overruled all other statutory acts since the focus of the insolvency code was to maximise recoveries. Generally, telecom, mining and infrastructure companies often come with coveted government licenses which generate interest amongst potential resolution applicants.

“From a creditor perspective, the judgment may have practical implications for insolvency resolutions in regulated sectors such as telecom, mining, and infrastructure, where enterprise value is closely linked to government-granted concessions and licences. Resolution applicants may now factor in additional regulatory uncertainties and approval requirements, which could influence valuation and structuring of resolution plans,” said Tushar Kumar, Advocate, Supreme Court of India.

“The natural resource of air waves, mines and the road is not transferred the CD as an asset- it is the license to utilise the airwaves and provide services, it is the right to carry out mining in the mine and it is the right to build and operate the road that is provided the CD. Such right is the asset,” said Deep Roy, Managing Partner, Equilex.

IBC is already facing uncertainty as a series of recent judicial verdicts have come up with unanticipated interpretations of the act.

In May 2025, the Supreme Court shocked the market by striking down the approved JSW Steel’s acquisition of Bhushan Power & Steel Limited (BPSL) and ordering its liquidation due to procedural lapses and delays. The ruling forced a potential reversal of a nearly fully implemented Rs 19,700 crore resolution plan. However, subsequently, the court overturned its own verdict. Similar interpretation issue came to the fore in the Hindustan National Glass(HNG) bankruptcy case when the court ruled AGI Greepac’s resolution plan didn’t have competition commission approval and hence was not maintainable.