No fix: RCom to file for bankruptcy
As lenders fail to reach consensus, Board decides to take firm to NCLT
After almost one-and-ahalf years of unsuccessful attempts to revive the firm, the Anil Ambani-led debt-ridden Reliance Communications (RCom) Board decided on Friday to take the firm to the bankruptcy court. It decided to move the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016. The Board decided to seek fasttracking the debt-resolution plans through the NCLT, Mumbai. The firm’s Board reviewed the progress of the RCom’s debt resolution plans since the invocation of strategic debt restructuring (SDR) in 2017. The Board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process was yet to make any headway, RCom said.
“Accordingly, the Board decided that the company will seek (to) fast track resolution through the NCLT, Mumbai. The Board believes 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,” the company said.
The Board cited lack of approvals and consensus on important issues as the primary reason for its decision. “Lack of 100 per cent approvals and consensus, as mandated by the RBI’s February 12, 2018, circular, on all important issues, among over 40 lenders, Indian and foreign despite the passage of 12 months and over 45 meetings. Further, the pendency of numerous legal issues at high courts, the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) and the Supreme Court impeding progress at various stages has also kept the issue on hold,” RCom said.
An official of SBI, which is leading the consortium of RCom’s lenders, said the bank was not worried about RCom moving the NCLT. “RCom is a non-performing asset for us since many quarters. The bank has made provisions for this and we are not worried,” the official said.
Some industry sources have, however, raised concerns that if RCom were to move the NCLT, it might impact Jio’s spectrum sharing deal with the company. RCom’s statement noted RCom and only two of its arms, Reliance Telecom and Reliance Infratel, will take appropriate steps shortly to implement the Board decision.
“There will be no impact on the business and operations of other subsidiaries of the company,” it said. RCom has to pay ~550 crore to Ericsson as part of an agreement it had reached with the latter in the National Company Law Appellate Tribunal (NCLAT).