RCom to go for insolvency resolution process

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RCom attributed “lack of 100% approvals and consensus, as mandated by RBI’s February 12, 2018 circular, on all important issues, amongst over 40 lenders, Indian and foreign despite the passage of 12 months and over 45 meetings”.
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Reliance Comunications (RCom) on Friday said that its board had decided to approach the National Company Law Tribunal (NCLT) for fast-tracking of its debt resolution plan.

The company said its board had resolved to take the NCLT route for early resolution of its debt as it was impossible to get 100% approval of all the 40 lenders despite over 45 meetings taking place over the past one year.

RCom attributed “lack of 100% approvals and consensus, as mandated by RBI’s February 12, 2018 circular, on all important issues, amongst over 40 lenders, Indian and foreign despite the passage of 12 months and over 45 meetings”.

Besides, it also blamed that the pendency of numerous legal issues at high courts, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and the Supreme Court impending progress at various stages.

“Accordingly, the board decided that the company will seek fast-track resolution through NCLT, Mumbai. The board believes that this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent, and time-bound manner within the prescribed 270 days,” according to the company.

It may be noted that the SC had last month sought response from Anil Ambani on a plea by Swedish telecom equipment manufacturer Ericsson India seeking initiation of contempt proceedings against him and two others for failing to clear its dues of Rs550 crore. Ericsson has sought that Ambani be “detained in civil prison” and restrained from travelling abroad unless the payment is made. It has also sought to restrain Reliance Telecom chairman Satish Seth and Reliance Infratel chairperson Chhaya Virani from leaving the country.

Even SC while refusing to exempt Anil Ambani from personal appearance had asked him to resolve the issue of its past dues with his elder brother Mukesh Ambani’s Reliance Jio Infocomm and clear as to who will pay the dues of the government after the latter refused to undertake to do so. The case is likely to coming up for hearing next week.

During the hearing, RJio had refused to undertake to clear the past liabilities of RCom that may arise, following the company’s Rs25,000-crore spectrum trading acquisition deal with the former.

A Bench led by Justice RF Nariman had on January 7 said that department of telecom (DoT) would give the required no-objection certificate (NoC) only after RCom and RJio resolved the issue between themselves over the past dues. After RCom failed to pay for its supplies procured from Ericsson in 2014, the latter initiated insolvency proceedings against it before NCLT to recover Rs1,150 crore. Subsequently, the two parties made an out-of-court settlement by which RCom was required to pay Rs550 crore.

Even RCom’s contempt petition against DoT for failing to give NoC to RCom’s spectrum deal with RJio is pending before the apex court.
The Supreme Court had on November 30 cleared the sale of spectrum by RCom to RJio on condition that the former furnished Rs1,400 crore as corporate guarantee to the government within two days. This corporate guarantee, to be furnished by Reliance Realty, a unit of RCom, was in addition to the land parcel that had to be provided as security as per the TDSAT’s order. DoT had asked RCom to provide bank guarantee of Rs2,950 crore towards outstanding spectrum charges to approve its spectrum sale to Reliance Jio.

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