ET: SBI in favour of a single Resolution Professional for RCom, subsidiaries

1 June 2019: State Bank of India has made a proposal to appoint a single resolution professional to run the bankruptcy process of Reliance Communications and two of its subsidiaries, people with knowledge of the development said. Chinese lenders to the Anil Ambani-controlled telecom company have, however, objected to the proposal.

SBI made the proposal at a meeting of lenders on Thursday, arguing that it would ensure better coordination during the bankruptcy proceedings of RCom and its Reliance Infratel and Reliance Telecom arms, the people said. This, the state-run bank said, would result in speedier resolution and maximisation of the companies’ value.

Two Chinese banks are said to have opposed the proposal, citing excessive workload if one person were to act as the resolution professional for all three. The National Company Law Tribunal had in May last year approved the appointment of three people as the interim resolution professionals (IRPs) — Pardeep Sethi, Mitali Shah and Manish Kaneria — to manage the insolvency process of RCom and the subsidiaries, though all of them represent a single firm, RBSA Advisors. An IRP can be confirmed as the resolution professional once the committee of creditors convenes and gives its consent.

The lenders also have the right to replace the IRP with a new person. SBI has also proposed to replace RBSA with Deloitte. One person close to the development said the Chinese lenders were likely to object to this proposal as well, though this was not corroborated.

“It is a policy of the bank not to comment upon individual accounts and its treatment”, an SBI spokesperson said in response to ET’s queries. China Development Bank, Export Import Bank of China and Industrial and Commercial Bank of China are among lenders to RCom as well as Reliance Telecom. China Development Bank’s exposure is around Rs 11,000 crore.

ET could not ascertain which of the three had opposed the proposal. “Most of the claims of the Chinese lenders are at the parent company level and they would not like the bankruptcy processes to be run as a single process as this would reduce their voting strength when deciding on common resolution plans for all three companies,” a banker said.

The lenders have decided to subject the proposed appointment of Deloitte to an electronic vote, ET reported on Friday. Several Indian banks are said to be backing the appointment of Deloitte.

The Economic Times reported



Categories: General News, India Bankruptcy

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