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Reliance Communications cleared a legal hurdle preventing it from selling its assets when the National Company Law Appellate Tribunal (NCLAT) on Wednesday froze insolvency proceedings against the beleaguered telecom operator.
RCom plans to sell its assets to Mukesh Ambani’s Reliance Jio and private equity player Brookfield to pare debt.
Earlier this month, the National Company Law Tribunal (NCLT) had admitted insolvency petitions against RCom and its subsidiaries, filed by Swedish telecom gear maker Ericsson to recover ₹1,150 crore in dues.
On Wednesday, the appellate tribunal decided to overturn the NCLT order after Ericsson agreed to settle the dispute by accepting RCom’s offer of ₹550-crore as an up-front payment.
On Tuesday, the NCLAT had urged Ericsson to negotiate a settlement instead of pressing for insolvency as that could actually be detrimental to the Swedish company’s chances of recovering any money. Ericsson, being an operational creditor, would not stand to gain much if RCom’s assets were to be auctioned under the insolvency process.
RCom’s lenders, including China Development Bank and the State Bank of India, had opposed the move to put the company through the insolvency process fearing massive hair-cuts. RCom owes banks nearly $7 billion, of which a substantial part can be settled if the deal with RJio goes through.
On Tuesday, RCom reached a settlement with minority shareholders in its tower subsidiary, Reliance Infratel Ltd, which paved the way for the sale of its tower and fibre assets.
RCom is expected to recover nearly ₹18,000 crore from the sale of its mobile and fixed-line assets. In addition, it is also in the process of monetising its real estate and other assets to reduce the debt burden.
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