Reliance Communications(RCom) was admitted into a bankruptcy resolution process today by a Mumbai bench of the National Company Law Tribunal (NCLT) in response to an application by trade creditor Ericsson India, according to court proceedings attended by Debtwire.
The admittance order is the culmination of a litigation process initiated by the Swedish telecom equipment manufacturer’s India arm on 8 September 2017 against RCom and two of its subsidiaries, Reliance Telecom and Reliance Infratel.
An admission into bankruptcy resolution proceedings effectively annuls the Anil Ambani-controlled group’s plan to sell its Indian wireless assets to Reliance Jio Infocomm (RJio) for INR 181bn (USD 2.69bn).
Under India’s Insolvency & Bankruptcy Code, once a company is admitted into bankruptcy, its board of directors is suspended and a court-appointed resolution professional (RP) will take over management, including trying to reach an agreement with domestic and international creditors.
The company’s outstanding USD 300m 6.5% senior secured notes due 2020 comprise about 4% of the secured claims against the company, according to Debtwire calculations.
Holders of the notes already in March approved amendments to enable to sale of RJio, though negotiations with the company were still ongoing about an overall restructuring of the notes.
Leading domestic creditor State Bank of India, which had objected to Ericsson’s bankruptcy push, told the two-member NCLT bench during hearings on the application that RJio had been selected as the winning bidder in the out-of-court, lender-driven process as its bid was 25% higher than the next highest bid.
RCom had received 21 bids across all asset classes, senior counsel Fredun De Vitre who argued for SBI, told NCLT.
CLICK HERE for Debtwire’s case profile on Reliance Communications
By Rajiv Savardekar and Anjali Agarwal