MUMBAI: After several failed attempts over the years to sell a portion of stake in the telecom business and raise money to repay its mountain of debt, the Anil Ambani group’s Reliance Communications (RCom) was admitted for insolvency proceedings by the National Company Law Tribunal’s (NCLT) Mumbai Bench on Thursday.
With this, technically, RCom is declared bankrupt — making it the first company from the beleaguered group to go belly up. The insolvency proceedings have resumed at NCLT after the National Company Law Appellate Tribunal vacated a stay against the same in April.
NCLT has allowed the resolution process to continue after condoning the time lost between May 2018 and 2019 in litigation. The insolvency proceedings were initiated in May last year by RCom’s operational creditor Ericsson, which had claimed Rs 1,500 crore in dues but finally settled for Rs 550 crore with interest. The case with Ericsson pushed Anil Ambani to the brink of a jail term, and a last-minute rescue by his brother Mukesh Ambani helped him stave off the threat.
Admitting Ericsson’s plea, the NCLT had allowed Interim Resolution Professionals (IRP) from RBSA Advisors to be appointed to manage the affairs of the three firms including two RCom subsidiaries Reliance Telecom and Reliance Infratel. “NCLT, Mumbai Bench on 7th May, 2019 orally directed that the Corporate Insolvency Resolution Process of the Corporate Debtor to continue and hence resumption of CIRP of Reliance Communications Limited,” the IRP said in a regulatory filing on Wednesday.
As per law, the board of directors of the companies stand suspended on resumption of insolvency proceedings, and all powers vest with the IRP. “The officers and managers of the corporate debtor shall report to the IRP and provide access to such documents and records of the corporate debtor as required by the IRP,” the filing said.
RCom owe banks an estimated Rs 50,000, and the consortium of 31 banks have now sought to replace the IRP appointed by the operational creditor with a new set of IRPs to represent the financial creditors. The NCLT bench has given time till May 30 for the IRP to respond.