Supreme Court Ruling on Aircel Insolvency to Have Far-Reaching Implications for Creditors in Telecom, Mining, and Infrastructure Sectors

Impact of Supreme Court Verdict on Insolvency and Bankruptcy Code (IBC)

On February 13, the Supreme Court of India ruled that telecom spectrum is a sovereign natural resource and cannot be treated as a private asset to be sold under the Insolvency and Bankruptcy Code (IBC). This verdict has significant implications for future bankruptcy cases involving companies from sectors such as telecom, mining, airline, and infrastructure.

The ruling implies that the Telegraph Act overrides the IBC, and telecom assets cannot be transferred to new buyers like in normal cases. This will impact the recoveries for lenders, which are already low, at 30-35 percent of admitted claims.

The verdict will also impact other IBC cases where insolvent companies own rights to public assets, including telecom and mining companies. Additionally, it will affect lenders in infrastructure sector insolvencies where the company holds public assets like toll contracts.

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The Supreme Court's verdict has far-reaching consequences for insolvency jurisprudence, fundamentally reshaping creditor expectations under the IBC. It may also impact the interpretation of other statutory acts, such as the Telegraph Act, in relation to the IBC.

Key Implications

• Telecom spectrum is considered a sovereign natural resource and cannot be treated as a private asset to be sold under the IBC.
• The Telegraph Act overrides the IBC, and telecom assets cannot be transferred to new buyers.
• The verdict will impact the recoveries for lenders, which are already low, at 30-35 percent of admitted claims.
• The ruling may also impact other IBC cases where insolvent companies own rights to public assets, including telecom and mining companies.
• Lenders in infrastructure sector insolvencies may also be affected by the verdict.

Recent Judicial Verdicts

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The IBC is already facing uncertainty due to a series of recent judicial verdicts with unanticipated interpretations of the act. Notably, the Supreme Court struck down the approved JSW Steel's acquisition of Bhushan Power & Steel Limited (BPSL) in May 2025, forcing a potential reversal of a nearly fully implemented Rs 19,700 crore resolution plan.