Anil Ambani Asked to Pay Ericsson, RCom-Jio Deal Likely

As the NCLAT orders Anil Ambani to settle dues with Ericsson, a Jio buyout seems more likely for RCom.

Chairman of debt-riddled Reliance Communications, Anil D Ambani hangs his head at a press conference.

(Photo: Reuters) 

The National Company Law Appellate Tribunal (NCLAT) on 30 May stayed bankruptcy proceedings against Reliance Communications after the debt-laden telecom operator agreed to pay Rs 550 crore to Ericsson to settle a payment dispute.

The NCLAT order clears the way for Anil Ambani-led-RCom to sell its telecom towers, spectrum and fiber assets to Reliance Jio. Run by richest Indian and Anil’s elder brother, Mukesh, Jio is buying RCom for about Rs 18,000 crore to clear some of the Rs 45,733 crore debt of the latter.

A two-member bench headed by NCLAT Chairman, Justice S J Mukhopadhaya, directed RCom and its subsidiares – Reliance Infratel and Reliance Telecom – to pay Rs 550 crore to Ericsson India within 120 days, failing which it will direct insolvency proceedings against the company.

The countdown would start from 1 June.

"Impugned order of 15 May 2018 and 18 May 2018 passed by National Company Law Tribunal (NCLT) Mumbai in... are stayed," the tribunal said.

NCLAT also directed the chairman/managing director of RCom to file an undertaking regarding payment of the amount.

The corporate debtor and financial creditors are given liberty to sell assets and deposit the sale proceeds in banks’ account. The sale will be subject to final decision of the tribunal.

National Company Law Appellate Tribunal

The appellate tribunal also directed the ‘resolution professional’ appointed by the Mumbai bench of the 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 15 May, the Mumbai bench of NCLT had admitted Ericsson's petition for beginning of insolvency proceedings against RCom.

Ericsson India had moved NCLT to recover its about Rs 1,100 crore dues by auctioning RCom. RCom lenders too had opposed the NCLT order as they see in Jio best option to recover their dues.

RCom had on 29 May reached a settlement with HSBC Daisy Investments, a minority shareholder in Reliance Infratel.

Ericsson, which had signed a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network, had alleged that it had not been paid the dues.