Spectrum under IBC cannot be transferred to new buyers without payment of government dues, says NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that spectrum held by telecom operators cannot be transferred to new buyers under insolvency proceedings if government dues are not cleared. This move is expected to deliver a blow to lenders of bankrupt telcos Reliance Communications (RCOM), Aircel Group and Videocon Telecommunications Limited.

NCLAT has clarified that though spectrum assets of a telco can be subjected to insolvency proceedings or liquidation, telcos cannot use or transfer the airwaves under the Insolvency and Bankruptcy Code (IBC) without settling government dues.

It added that dues of the government, including deferred spectrum payments, cannot be wiped off under bankruptcy proceedings.