RCom Moves NCLAT Challenging Order Allowing Insolvency Plea
Reliance Communications Ltd. today said it has moved appellate tribunal NCLAT challenging the National Company Law Tribunal’s decision to allow insolvency proceedings against it on a plea filed by Swedish telecom equipment major Ericsson.
Anil Ambani-run RCom’s plea is expected to be heard by the National Company Law Appellate Tribunal in the coming week.
The move, confirmed by RCom in a regulatory filing today, comes even as the telecom operator is in “advanced stages of discussions” with Ericsson for settling issues related to unpaid dues (estimated at over Rs 1,000 crore) outside insolvency proceedings.
RCom informed the stock exchanges today that it has approached NCLAT along with its two subsidiaries – Reliance Telecom and Reliance Infratel – to stay the order passed by the Mumbai bench of the NCLT on May 15.
The directors of RCom and two of its subsidiaries Reliance Telecom and Reliance Infratel today filed appeals before the NCLAT challenging and praying to stay the order of NCLT Mumbai, whereby Ericsson applications had been allowed to be admitted for debt resolution under the NCLT IBC (Insolvency and Bankruptcy Code) process.RCom Spokesperson
On May 15, NCLT had admitted an insolvency petition filed by Ericsson against RCom and two of its subsidiaries seeking to recover unpaid dues.
Ericsson, which had signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecom network had alleged that it had not been paid the bill. Last September, the Swedish company had filed a petition in the NCLT’s Mumbai bench seeking liquidation of the telecom operator to recover Rs 1,150 crore that RCom allegedly owes it.
The admission of the petition could potentially delay RCom’s plans to sell assets to lower its debt, and cast a cloud of uncertainty on its plans of selling wireless assets (spectrum, towers, fibre and nodes) to Reliance Jio.
“With this, RCom can now no longer sell its towers/fibre/spectrum assets to Jio,” a note by CLSA dated May 21 said citing the bankruptcy proceedings. The brokerage dropped coverage on RCom “owing to the current state of affairs including uncertainty on the deal with Jio and resource allocations”.