Anil Ambani's debt-laden telecom venture Reliance Communications (RCom) has decided to file for insolvency after unable to sell its spectrum assets to elder brother Mukesh's Reliance Jio, and a crushing debt of £4.6 billion not going anywhere. The insolvency filing came weeks after Swedish network giant Ericsson petitioned the Supreme Court to arrest Anil over recurring delays in payment of RCom's dues worth £55 million, and accused the businessman of engaging in “gross and wilful contempt” of the apex court.
RCom released a statement saying, “The board decided that the company will seek fasttrack resolution through NCLT, Mumbai. The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days.” The company's board had met to review progress of its debt resolution plan since the invocation of strategic debt restructuring on June 2, 2017. The statement added, “The board noted that, despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway.”
RCom said 100 per cent approval of all 40 lenders had been “impossible to achieve” on any matter despite 45 meetings in over 12 months. Other factors prompted it to opt for insolvency were, as the company described it, “recurring legal challenges by department of telecom for spectrum monetisation” and the continuing litigation by other parties. The statement also said, “Resolution through NCLT is in the best interests of all stakeholders, ensuring finality, certainty and transparency through a time-bound court-approved process.”
RCom had been unable to get its spectrum trading deal with Jio pass through DoT norms, after Jio sought protection from any liability after the deal. Jio had petitioned DoT to insulate it from any dues arising towards RCom for the period prior to the clearance of the deal. However, DoT refused to co-operate. A senior official at the telecom department said, “There is no question of giving any kind of immunity to the new buyer. It is public money, and we will take it from whoever owns it in case the corporate guarantee that RCom is providing us does not prove to be sufficient.”