RCom moves NCLAT challenging order allowing insolvency plea

Reliance Communications today said it has moved appellate tribunal NCLAT challenging the National Company Law Tribunal (NCLT) decision on beginning insolvency proceedings against it on a plea filed by Swedish telecom equipment major Ericsson.

Anil Ambani-run RCom's plea is expected to be heard by the National Company Law Appellate Tribunal (NCLAT) in the coming week.

The move, confirmed by Reliance Communications in a regulatory filing today, comes even as RCom is in "advanced stages of discussions" with Ericsson for settling issues related to unpaid dues (estimated at over Rs 1,000 crore) outside of the insolvency and bankruptcy proceedings.

RCom informed the stock exchanges today that it has approached NCLAT along with its two subsidiaries - Reliance Telecom and Reliance Infratel - to stay the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) on May 15.

 

"The directors of RCom and two of its subsidiaries Reliance Telecom and Reliance Infratel today filed appeals before the NCLAT challenging and praying to stay the order of NCLT Mumbai, whereby Ericsson applications had been allowed to be admitted for debt resolution under the NCLT IBC (Insolvency and Bankruptcy Code) process," RCom spokesperson said in a statement.

It may be recalled that on May 15, NCLT had admitted an insolvency petition filed by Ericsson against Reliance Communications and two of its subsidiaries seeking to recover unpaid dues.

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 bill.

Last September, the Swedish company had filed a petition in the NCLT's Mumbai bench seeking liquidation of the telecom operator to recover Rs 1,150 crore that RCom allegedly owes it.

The admission of the petition could potentially delay RCom's plans to sell assets to lower its debt, and cast a cloud of uncertainity on its plans of selling wireless assets (spectrum, towers, fibre and nodes) to Reliance Jio.

"With this, RCom can now no longer sell its towers/fibre/spectrum assets to Jio," a note by CLSA dated May 21 said citing the bankruptcy proceedings.

The CLSA further said it is dropping the coverage on RCom "owing to the current state of affairs including uncertainty on the deal with Jio and resource allocations".