Mumbai (Maharashtra) [India]: Reliance Communications has decided to file for insolvency and will move the National Company Law Tribunal NCLT for fast track resolution. The decision was taken after a meeting called for by RCom's Board of Directors on Friday to review the progress of the company’s debt resolution plans. The Board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetization plans, and the overall debt resolution process is yet to make any headway.
This "unfortunate outcome", RCom said, could be attributed to two key unresolved challenges: Lack of 100 per cent approvals and consensus as mandated by the Reserve Bank of India's February 12 circular, on all important issues amongst over 40 lenders, Indian and foreign, despite the passage of 12 months and over 45 meetings. And, pendency of numerous legal issues at high courts, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and Supreme Court impeding progress at various stages.
"Accordingly, the Board decided that the Company will seek fast track resolution through 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," read an official statement issued by the firm. RCOM and only two of its subsidiaries, Reliance Telecom Ltd. and Reliance Infratel Ltd., will take appropriate steps shortly to implement the Board decision.
However, the firm clarified that the decision to file for insolvency will have no impact on the business and operations of other subsidiaries of the company. RCOM is under a debt of Rs 46,000 crore and is facing litigation from telecom equipment making company, Ericsson, for non-payment of dues of Rs 550 crore.
The Supreme Court had ordered Anil Ambani-led RCOM pay the dues with interest to Ericsson by December 31. Anil Ambani is also facing a contempt case for non payment of dues despite the court order.