NCLT to hear Ericsson's RCom insolvency petition on November 9

MUMBAI: The National Company Law Tribunal ( NCLT) will hear on November 9 the case on whether Ericsson's insolvency petition against Reliance Communications ( Rcom) should be accepted.

On September 11, Ericsson had filed for insolvency in the NCLT under the newly-formed Insolvency and Bankruptcy Code to recover Rs 1,150 crore from RCom for services and equipment it had earlier supplied. Under this, the tribunal can initiate takeover of the company or even liquidation to settle debt.

Negotiations between the two to reach an out of court settlement failed so far as well.

Two months back, the court had rejected Ericsson’s right to object to admitting the merger application of Aircel and RCom as the amount it was due was below 5% of RCom’s total debt. The application to object was simultaneously filed by 13 others, apart from Ericsson, who were claiming dues from RCom.

Last Sunday, Rcom called off its merger with Aircel.

Shares of Rcom closed at Rs 17.20 a piece, up by 0.29% on the BSE on Friday.


In its application to court, Ericsson had filed an email exchange from January 2017 in which Rcom apologizes for a delay in December’s dues of Rs 350 crore, which it hoped to pay off as the telco sold off its telecom towers to Brookfield. In the email presented in court, RCom blamed the delay of deal closure on demonetization. In November 2016, the Indian government had rendered 86% of the currency in circulation worthless, a move that kept banks extremely busy.

In May, Ericsson sent another mail to RCom, seeking information about the planned merger scheme to be presented to court and repayments.

Ericsson counsel had earlier told ET that RCom had on June 29 said they will pay Rs 125 crore by July 31 and subsequently pay Rs 60 crore in a week. None of that happened.

RCom this week has said that it will reevaluate its Brookfield deal as well now that Aircel is off the table.

Both these deals were expected to reduce the debt of the telco by 60%. The Ambani firm has chalked out an alternate plan involving sale of tower, fibre, spectrum, and real estate assets, which could generate over Rs 25,000 crore that could be used to repay lenders. It's total debt is about Rs 46700 crore.

The company is going through a strategic debt restructuring (SDR) and has a standstill with its lenders. Depending on the progress of the deleveraging plans, the consortium of lenders, led by the State Bank of India, will take a decision in December this year on whether to convert their debt to equity and take over the management of the company, or let RCom manage it till December 2018, which is when RCom needs to start meeting its repayment obligations.

RCom has said it is in discussion with its lenders about the alternative debt reduction plans. The company hasn’t given any timelines for the sale of assets.