Published: Sun, February 03, 2019
Markets | By Otis Pena

Reliance Communications opts for insolvency route after failing to repay debt

Reliance Communications opts for insolvency route after failing to repay debt

The NCLT on the request of RCom had granted it time to clear dues to avoid insolvency proceedings. In a statement released on Friday, the embattled Anil Ambani-led telecom firm said that it has made a decision to implement debt resolution plans through the NCLT framework due to lack of consensus among the lenders and the several pending legal challenges impending progress at various stages. "The board believes that this course of action will be in the best interests of all stakeholders, ensuring a comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days", the statement said.

The decision was taken after a meeting called for by RCom's Board of Directors on Friday to review the progress of the company's debt resolution plans.

The statement said the board decided that the company will "seek fast track resolution" through the law tribunal in Mumbai.

RCom said "despite the passage of 12 months and over 45 meetings" it has become hard to get "100% approvals and consensus". Other factors that prompted it to opt for insolvency were - as the company described it - "recurring legal challenges by the department of telecom (DoT) for spectrum monetisation" and the continuing litigation by other parties.

To recall, previous year in December, Department of Telecom rejected Rcom and Jio spectrum trading deal as it does not conform to its guidelines.

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Over twelve months, talks with forty lenders to reach a consensus has been impossible and has driven them to the bankruptcy court, the debt-laden telecom company said.

The insolvency tribunal named three separate IRPs from RBSA Restructuring Advisors LLP to run RCom and its two units, RTL and Reliance Infratel, as part of the bankruptcy proceedings. The government said the deal to trade airwaves does not conform to its guidelines after Jio wrote to DoT refusing to be held liable for any of RCom's past dues.

RCom also filed a contempt plea against the DoT for intentionally delaying the RCom-Jio spectrum deal.

The debt resolution process was initiated in June 2017, when the company had an estimated Rs 45,000 cr of debt.

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