RCom to go for insolvency as it fails to repay debt

Anil Ambani

Anil Ambani

"This (moving NCLT) will at least ensure a debt resolution within a specific time frame and some sort of certainty for lenders", said a person familiar with the matter.

"The Board of Directors of RCom today reviewed the progress of the company's debt resolution plans since the invocation of SDR on June 2, 2017".

"Accordingly, the Board decided that the company will seek (to) fast track resolution through the NCLT, Mumbai".

RCom said this course of action will be in the best interest of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days.

RCom said 100% approval of all 40 lenders had been "impossible to achieve" on any matter despite 45 meetings in over 12 months.

The company also pointed to the pendency of numerous legal issues at high courts, Telecom Disputes Settlement & Appellate Tribunal (TDSAT) and the Supreme Court impeding progress at various stages, as a reason for going to NCLT.

An official of SBI, which is leading the consortium of RCom's lenders, said the bank was not anxious about RCom moving the NCLT.

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One of India's oldest telecom firms, Reliance Communications will file an application at the Mumbai bench of National Company Law Tribunal (NCLT) along with its units Reliance Telecom Ltd. and Reliance Infratel Ltd.

"There will be no impact on the business and operations of other subsidiaries of the company", it said.

The insolvency filing comes weeks after Swedish network giant Ericsson petitioned the Supreme Court to arrest Anil over recurring delays in payment of RCom's dues worth Rs 550 crore, and accused the businessman of engaging in "gross and wilful contempt" of the apex court.

Apart from Ericsson, the Anil Ambani-led firm has to clear the debt of almost 39 financial lenders and operational creditors.

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 cancelled. 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.

A key part of its restructuring plan involved the sale of assets, including the sale of switching nodes, fibre, telecom towers, worth about ₹25,000 crore, to pay the money it owes to banks like IDBI Bank, Standard Chartered Bank, Union Bank, Canara Bank, and HSBC and China Development Bank etc.

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