27 August 2019: The committee of creditors (CoC) of Reliance Communications (RCom) will hold their sixth meeting on August 27, according to a BSE notice. Ericsson had dragged RCom to insolvency and bankruptcy proceedings in September 2017 over non-payment of dues of over Rs 1,500 crore. The petition was admitted in the National Company Law Tribunal (NCLT), however, the National Company Law Appellate Tribunal (NCLAT) stayed the insolvency order, after an appeal from RCom and a settlement with Ericsson was chalked out.
On May 16, 2018, the NCLT’s Mumbai bench had admitted Ericsson’s insolvency plea against RCom and two of its arms seeking to recover unpaid dues. However, on May 30, NCLAT granted a conditional stay on insolvency proceedings against these firms.
Later in a hearing in April 2019, NCLAT said that Ericsson may have to refund Rs 578 crore that the Swedish telecom equipment maker has recovered as dues from RCom in case insolvency proceedings are triggered against the debt-ridden firm. FE had reported that hearing the RCom-Ericsson matter, the bench headed by its chairman Justice SJ Mukhopadhaya had said: “Why should one party take the amount and other creditors suffer and why should banks suffer? Why should the Indian economy suffer?”
The NCLAT had said that it would decide on the merits of RCom’s plea to allow an insolvency case against the company. The Supreme Court had, on February 20, held RCom chairman Anil Ambani and two others guilty of contempt for violating its order by not paying dues of Rs 550 crore to Ericsson. The apex court had said they would face a three-year jail term if the company failed to pay up within four weeks.
In May 2019, NCLT, Mumbai, said that any resolutions passed by Reliance Infratel’s CoC are subject to its decision on Doha Bank’s petition against admission of bankers’ claims based on invoked corporate guarantees issued by RITL in favour of Reliance Communications.
NCLT’s Mumbai bench in June 2019 approved appointment of a common resolution professional as part of the corporate insolvency resolution proceedings against Reliance Communications, Reliance Infratel and Reliance Telecom. According to the proceedings, the majority of the committee of creditors across the three companies had independently voted to appoint Anish Niranjan Nanavati as RP to replace the existing interim resolution professionals.
The selection for a common RP was also supported by the rationale that the three companies have integrated business affairs with significant overlap of lenders among the three.