NCLAT directs Reliance Communications to pay Rs 550 crore to Ericsson, stays insolvency process
Anil Ambani, Chairman of the Reliance Anil Dhirubhai Ambani Group. (Photo: Reuters) Anil Ambani, Chairman of the Reliance Anil Dhirubhai Ambani Group. (Photo: Reuters)
The National Company Law Appellate Tribunal (NCLAT) has stayed bankruptcy proceedings against Reliance Communications, thus clearing the way for Anil Ambani-led company to sell its telecom towers, spectrum and fiber assets. RCom also agreed to pay Rs 550 crore to Ericsson to settle a payment dispute.
“RCom’s asset sale to Reliance Jio and Brookfield for an aggregate value of Rs 18,100 crore has been allowed to proceed by the NCLAT,” RCom said. The assets sale includes spectrum, fiber, telecom towers, MCNs and certain real estate assets in Delhi and Chennai. “RCom expects to now complete the sale of its assets within the next few weeks, having removed legal hurdles of cases by minority investors of RITL, and Ericsson, thereby achieving an overall debt reduction of approximately Rs 25,000 crore from the first phase of its asset monetization programme,” it said.
A two-member bench headed by NCLAT Chairman, Justice S J Mukhopadhaya directed RCom and its subsidiaries — Reliance Infratel and Reliance Telecom — to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company. The countdown would start from June 1. “Impugned order of May 15, 2018 and May 18, 2018 passed by NCLT Mumbai in … are stayed,” the tribunal said.
The appellate tribunal also directed the Resolution Professional appointed by the Mumbai bench of the National Company Law Tribunal (NCLT) to allow RCom to take over day to day functioning. “Resolution Professional will allow the corporate debtor (RCom) management to takeover day to day functioning,” the court said.
On May 15, the Mumbai bench of NCLT had admitted Ericsson’s petition for beginning of insolvency proceedings against RCom. Ericsson India had moved NCLT recovering its about Rs 1,100 crore dues by auctioning RCom.
RCom lenders had also opposed the NCLT order as they see in Jio best option to recover their dues. RCom had reached a settlement with HSBC Daisy Investments — a minority shareholder in Reliance Infratel. Ericsson which had signed a 7-year deal in 2014 to operate and manage RCom’s nationwide telecom network — which had alleged that it had not been paid the dues.
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