Reliance Communications to go for insolvency as it fails to repay debt

Reliance Communications to go for insolvency as it fails to repay debt”

The Board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway, the statement said.

Outlining the reasons behind the decision to go to the NCLT, RCom said that there is an absence of complete approval and consensus among 40 lenders, Indian and foreign, even after 45 meetings over the course of 12 months, as well as numerous legal issues pending at high courts, TDSAT and the Supreme Court.

Under the NCLT process, interim resolution professionals (IRPs) will be nominated by the tribunal to run the company and its units and oversee a bidding process to sell the remaining assets within a maximum 270 days.

"Accordingly, the Board decided that the Company will seek fast track resolution through NCLT, Mumbai", it said.

A key part of its restructuring plan involved the sale of assets, including the sale of switching nodes, fibre, telecom towers, worth about ₹25,000 crore, to pay the money it owes to banks like IDBI Bank, Standard Chartered Bank, Union Bank, Canara Bank, and HSBC and China Development Bank etc. Jio didn't immediately respond to ET's queries.

"Resolution through NCLT is in the best interests of all stakeholders, ensuring finality, certainty, and transparency through a time-bound court-approved process", the telco further added.

RCom was expecting to realise Rs 975 crore from sale of spectrum to Jio which it promised to use paying dues of Rs 550 crore to Ericsson and Rs 230 crore to settle dues of minority stakeholder Reliance Infratel.

RCom also filed a contempt plea against the DoT for intentionally delaying the RCom-Jio spectrum deal. Jio had petitioned DoT to insulate it from any dues arising towards RCom for the period prior to the clearance of the deal. But Ericsson had still not been paid by September 30 a year ago, despite RCom's commitment. However, that hope also got shattered as the proposal has not got a clear approval from the Department of Telecommunications or DoT. This matter is being separately pursued in the NCLAT.

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