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Beleaguered telecom operator Reliance Communications’ (RCom) Insolvency and Bankruptcy (IBC) proceedings are back on track, with the National Company Law Appellate Tribunal (NCLAT) permitting the operator’s appeal to continue the process.
In a major relief to RCom, the appellate tribunal on Tuesday approved its plea to proceed with insolvency plans and lifted an earlier moratorium.
It also directed that the moratorium on RCom’s assets be maintained. The company will also maintain a status quo on the dues.
According to the ruling, all legal cases and other liabilities now stand suspended.
The ruling also brings the case back to the National Company Law Tribunal’s (NCLT) Mumbai Bench, through which the beleaguered telecom major will seek a debt resolution. RCom has sought the insolvency proceedings as it was unable to pay lenders’ dues.
‘Cannot invoke guarantees’
The NCLAT also said RCom or its guarantors cannot invoke any guarantees, mortgage, or other financial instruments without its or the Supreme Court’s permission. RCom was also forbidden from selling or transferring any assets of the company.
The Anil Ambani group company had moved the NCLAT on February 4 to withdraw its earlier order that stayed the IBC proceedings.
Also read:NCLAT’s directive may not sit well with Ericsson
The NCLT-Mumbai will now hear the matter on May 7, following which the bankruptcy proceedings will begin with the appointment of an Insolvency Resolution Professional (IRP).
Swedish telecom equipment manufacturer Ericsson, an operational creditor, had earlier opposed the move. The company had moved a bankruptcy court in 2017, accusing RCom of not paying ₹1,500 crore in dues for a seven-year contract signed in 2013 to manage and operate its network.
Ericsson had dragged Ambani to the court after RCom failed to clear its dues, and won the suit.
In January, RCom deposited ₹118 crore with Supreme Court Registry as partial payment of dues it owes to Ericsson. The Indian firm later paid a total of ₹576 crore to Ericsson and a fine of ₹3 crore to the apex court.
On April 8, the NCLAT reiterated its earlier observation that Ericsson is liable to repay the settlement to RCom, in case the latter initiates the Corporate Insolvency Resolution Process (CIRP).
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