Reliance Infratel Insolvency: Doha Bank Moves NCLT Seeking Protection Of Its Rights

Doha Bank moved the National Company Law Tribunal seeking to protect its rights over the proceeds generated from any prospective resolution plan for Reliance Infratel Ltd.

The bank said it may receive a lesser percentage of the recoverable amount as its voting rights in the debt-ridden company’s committee of creditors were reduced. To be sure, distribution of proceeds under the Insolvency and Bankruptcy Code is determined by a lender’s voting right in the CoC, and the voting right is determined based on the claims admitted by a resolution professional.

Reliance Infratel’s committee of creditors next meeting will be held on Jan. 30.

Reliance Infratel had issued certain guarantees in favour of another Anil Ambani Group company Reliance Communications Ltd. The telecom company, however, started defaulting on its payment obligations, after which the lenders invoked guarantees issued by Reliance Infratel and converted them into debt. That gave the lenders to RCom voting rights in Reliance Infratel’s CoC and bringing down the Doha Bank-led consortium’s voting rights from 55 percent to 15 percent.

In May, the Doha Bank-led consortium, including three foreign lenders, had approached the NCLT challenging the dilution of their voting rights and seeking a stay on committee of creditors’ meetings. While the tribunal refused to grant a stay, it ordered that the outcome of Reliance Infratel’s resolution process would be subject to its decision on Doha Bank’s plea.

The NCLT on Tuesday reiterated that it won’t stay the CoC’s meetings. It, however, directed that Doha Bank’s current voting percentage won’t not affect its future entitlement on the proceeds from Reliance Infratel’s resolution till the tribunal gives its final orders.

Reliance Infratel was dragged into insolvency by the Indian arm of the Swedish telecom equipment maker Ericsson after it defaulted on its payment obligations. The Mumbai bench of the NCLT had admitted the insolvency petition in May 2018. It had stayed the resolution process in June 2018 and again vacated it in April 2019.