In a new turn of events, RCom along with its subsidiaries Reliance Infratel and Reliance Telecom has gone ahead to the appellate tribunal to halt the order which was passed by the NCLT, declaring that RCom should now proceed along the laws of insolvency and bankruptcy post admitting Ericsson’s petition. This move has been done as the telco is now in talks with Ericsson to the settle the matter outside of court for the dues which they owed to the Swedish manufacturer amounting to more than Rs 1,000 crore. RCom approached National Company Law Appellate Tribunal asking the bench to set aside the order which NCLT passed. Two anonymous lawyers who did not want to be identified stated that they had the grounds to halt the insolvency order, given that Ericsson was an operational creditor.
Further, the person added, “There is a dispute, so under Section 9, insolvency proceedings cannot begin.” When ET asked questions about the same, there were no answers from RCom or Ericsson.
Last time ET reported that RCom was trying to negotiate a price between Rs 700-800 crore after Ericsson rejected their first offer of Rs 400-500 crore. The Indian telecom operator is directly in talks with the headquarter of Ericsson in an attempt to solve the matter outside the court.
The market was fast in reflecting the sentiment after this news broke out as RCom shares fell in price 12.7% to Rs 13.40 during the closing time in BSE on Monday. This was most likely due to the speculation that discussions with Ericsson would not come to fruition for RCom. As per a report by ET, Ericsson had asked State Bank of India, one of RCom’s lenders to issue an undertaking saying that if RCom defaults on the payment, then the bank will pay up the dues.
After the NCLT admitted Ericsson’s plea against RCom, it was proven in front of the bench that the aspect of debt and default were clearly in RCom’s turf which led to the NCLT pushing RCom towards insolvency. The proceedings for the same were to begin on May 15. The tribunal also set up a three-member committee of IRPs from RBSA Restructuring Advisors LLP for RCom and each of its two subsidiaries. The IRPs have a 270 days window where they have to restructure the debt and come up with ways to pay back the dues, failing which RCom will have to go through liquidation.
It is also noteworthy that after the NCLT ordered insolvency for RCom, the telco was barred from selling its wireless assets including spectrum, towers, fibre network and switching nodes to Reliance Jio Infocomm for Rs 18,000 crore which would pare the telco’s debt of Rs 46,000 crore.
Ericsson has also filed a caveat in the NCLAT about which the Tribunal will inform the Swedish Manufacturer whether or not it will be admitted or heard upon. According to a second lawyer, Reliance Communication’s plea in the Appellate tribunal was unlikely to bear any fruit because according to the NCLT’s order the telco is required to declare insolvency publicly through newspaper advertisements on Tuesday.