Anil Ambani-owned Reliance Communications Files For Bankruptcy To Pay Off Debts - Next Big Brand

Anil Ambani-owned Reliance Communications Files For Bankruptcy To Pay Off Debts

anil ambani
Written by Sourav
[email protected] | | Published on: February-04-2019 05:13 AM

Reliance Communications will shortly move the insolvency tribunal seeking bankruptcy protection as the Anil Ambani-owned company seeks to sell assets, repay its debt worth Rs. 42,000 crore within the next 270 days, having been unable to do so in the last one and a half year.

RCom and its two units — Reliance Telecom Ltd (RTL) and Reliance Infratel Ltd — will soon take steps to seek fast-track resolution through the National Company Law Tribunal (NCLT), Mumbai, the company said.

“The board of directors believe that this course of action will be in the best interest of all stakeholders, ensuring inclusive debt resolution in a full and final manner within the prescribed 270 days,” the company said.

Over the past year, talks with 40 of their lenders to reach a consensus has been impossible and has driven them to the bankruptcy court.

“Repeated legal challenges by Department of Telecommunications (DoT) for spectrum monetization and periodic litigation by other parties also support the decision to opt for the NCLT resolution track,” the company said.

RCom’s move will mean its agreements to sell 122.4 MHz of spectrum and 43,000 telecom towers to Reliance Jio and some real estate to Canada’s Brookfield get canceled. However, it has already completed the sale of nodes and fiber for Rs 5,000 crore.

In May 2018, the NCLT had admitted three insolvency petitions against RCom filed by Swedish gear maker Ericsson, which was seeking a payment of over Rs1,100 crore in dues. The insolvency tribunal named three separate IRPs from RBSA Restructuring Advisors LLP to run RCom and its two units, RTL and Reliance Infratel, as part of the bankruptcy proceedings.

But the telco — which was forced to shut its wireless operations under financial pressure late 2017 — moved the National Company Law Appellate Tribunal (NCLAT) and averted bankruptcy proceedings by citing its deals with Jio and Brookfield, and agreed to pay Ericsson Rs 550 crore as a settlement.

But RCom has still not paid Ericsson, triggering contempt of court petitions in the Supreme Court against the telco’s chairman Anil Ambani, with the spectrum sale to Jio having been rejected by the Department of Telecommunications (DoT). The government said the deal to trade airwaves does not conform to its guidelines after Jio wrote to DoT refusing to be held liable for any of RCom’s past dues.

Besides Ericsson, RCom also needs to pay Rs232 crore to the minority shareholders of Reliance Infratel, including HSBC Daisy Investments. This matter is being separately pursued in the NCLAT.

Jio and RCom recently extended the tenure of their trading pact by another six months to June end, but with Friday’s statement, that deal would appear to be off the table.

Reliance Communications and two subsidiaries, Reliance Telecom Ltd. and Reliance Infratel Ltd., will be taking appropriate steps to implement this decision. However, the company has already clarified that there will be no impact on the business and functioning of its other subsidiaries, including GCX, Reliance IDC among others.


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