RCom bankruptcy proceedings: Prospects of early start look bleak

The Insolvency and Bankruptcy (IBC) proceedings of telecom operator Reliance Communications (RCom) is expected to be delayed further as the Supreme Court has adjourned hearing its application by two weeks.

The adjournment is also likely to impact RCom’s ongoing proceedings before the National Company Law Appellate Tribunal (NCLAT), with the next hearing slated for April 8. The overall process of IBC re-initiation is also likely to be delayed by four weeks, sources close to the development told BusinessLine.

On Thursday, the apex court heard a petition filed by RCom before NCLAT on May 20, 2018, to withdraw earlier wherein it sought that the company should not be send to IBC.

On March 18, debt-laden RCom and Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of Reliance Industries, had decided to mutually terminate an asset-sale agreement.

This comes even as Mukesh Ambani stepped in to save his younger brother Anil from going to jail by coughing up the money to repay Swedish equipment major Ericsson. RCom paid ₹458.77 crore to Ericsson, avoiding a potential three-month jail term for its Chairman Anil Ambani.

The asset sale agreements, signed on December 28, 2017 and August 11, 2018, were aimed at reducing RCom’s debt but regulatory and legal hurdles delayed the completion of the deal.

Having completed the payment obligations to Ericsson, RCom was to NCLAT in the next few days seeking resurrection of its insolvency case in the lower court.

On Tuesday, hearing an application filed by RCom, NCLAT stayed two show cause notices issued by the licenser to the beleaguered telecom operator. Earlier, DoT had served a notice to RCom for defaulting on a ₹ 21-crore spectrum payment in Mumbai circle, seeking why its spectrum and licence should not be withdrawn. On its part, RCom moved NCLAT seeking a stay on the notices.

Another DoT letter, issued six days ago to Axis Bank to encash a bank guarantee of ₹2,000 crore provided by RCom, was also stayed by NCLAT.