The Mumbai bench of the National Company Law Tribunal (NCLT) has approved Reliance Jio’s resolution plan for the bankrupt Reliance Infratel. Jio is owned by the Mukesh Ambani's Reliance Industries (RIL), while Reliance Infratel was once owned by Mukesh’s younger brother Anil. Lenders, who now own Reliance Infratel, would receive about £440 million from the sale of the company’s telecom towers and fibre assets. But, the distribution of the sale proceeds are subject to the disposal of Doha Bank’s intervention application.
Separately, UV Asset Reconstruction Company (UVARC) has proposed a £1.4 billion resolution plan for Reliance Infratel’s parent Reliance Communications (RCom). It has proposed an upfront payment of £1.5 million to creditors and to make the remainder payments in the future after it monetises RCom’s properties. UVARC’s resolution proposal for RCom’s enterprise, data centre, spectrum and real estate businesses are, however, pending approval from the NCLT.
RCom owes £3.17 billion to financial creditors and another £2.25 billion to the department of telecom. It had closed its consumer mobile business in 2019 and subsequently filed for bankruptcy after it was unable to repay debts. Recently, UVARC’s resolution plan for Aircel’s real estate, telecom towers and spectrum businesses was rejected by the RBI. The development happened after the NCLT greenlighted the deal. Industry watchers see a cloud hanging over the UVARC-RCom transaction too.
The RBI had denied permission to the UVARC-Aircel deal as it did not meet the guidelines of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act. This law does not allow ARCs to submit resolution proposals, whereas the Bankruptcy Code does.
This will be RIL’s second bankrupt asset purchase after textile manufacturer Alok Industries. Initially, RIL had proposed to buy the entire assets of RCom, but later changed its mind due to various reasons, including delay in getting regulatory approvals.
