MUMBAI/BHUBANESWAR: In a relief to Reliance Communications Ltd (RCom), the National Company Law Appellate Tribunal (NCLAT) on Wednesday stayed insolvency proceedings against the company and its subsidiaries Reliance Infratel and Reliance Telecom.
The move comes a day after the Anil Ambani-led RCom settled with Swedish telecom equipment maker Ericsson to pay dues worth Rs 550 crore, out of the unpaid dues worth Rs 1,150 crore within 120 days, that is, by September 30.
“Taking into consideration the fact that if the corporate insolvency resolution process continues, both financial creditors, as well as operational creditors, will suffer,” the two-judge bench headed by Justice SJ Mukhopadhyay noted.
The tribunal also permitted RCom and its joint lenders forum led by SBI to sell the mortgaged assets to Reliance Jio Infocomm Ltd and deposit the raised funds with banks. It also said that in case the agreed amount is not paid to Ericsson within 120 days starting June 1, the tribunal may revive the insolvency process against the company. If this happens, the proceeds from the sale of the mortgaged property would go back to RCom.
The stay on the insolvency process implies that the company can now proceed with the Rs 18,000 crore deal with Reliance Jio for the sale of its assets mortgaged with banks.
Importantly, it allows RCom and its subsidiaries to go ahead with the debt restructuring plan announced in last December. Because of the undergoing insolvency proceedings, the proposed asset monetisation scheme was put on hold, with some even fearing if it will ever resume.
As per the plan, the restructuring was to slash debt worth Rs 46,000 crore to about Rs 6,000 crore. The NCLAT’s stay allows the companies to continue with their strategic debt restructuring plans, with the proceeds for the sale of assets to Jio going to the secured financial creditors.
Vedanta to pay Rs 5,320 crore to Electrosteel creditors
The National Company Law Appellate Tribunal on Wednesday gave its nod to Vedanta Ltd to make an upfront payment of Rs 5,320 crore to the Committee of Creditors of debt-ridden Electrosteel Steels India Ltd.
The two-judge bench headed by Justice SJ Mukhopadhyaya said this payment would be subject to the outcome of the petition filed by Renaissance Steel challenging Vedanta’s bid.
However, the appellate tribunal reserved its verdict over Renaissance Steel’s petition challenging Vedanta’s eligibility to bid for Electrosteel under section 29A of the Insolvency & Bankruptcy Code.