Reliance Communications (RCom has requested the Supreme Court to quash the insolvency process against it and prevent any challenge to its asset sale to Jio and Brookfield.
The Anil Ambani-owned telco told the top court that the value of its assets is getting eroded if these clauses are not removed since buyers are unwilling to go ahead otherwise.
“The continuation of the corporate insolvency resolution process (CIRP) will result in much lesser value from the sale process than that determined through a fair and transparent bidding run by the lenders way ahead of the commencement of CIRP process,” said the operator in its petition. It added that “under the sale agreements, the buyers are willing to proceed with the purchase only if the process is irreversible and immune to further challenges.”
The company is running against time to pare down its debt of over Rs 46,000 crore and is heavily banking on completing the sale of its wireless assets, which includes spectrum, to Jio and few land parcels to Brookfield for around Rs 18000 crore, to reduce its debt
The telco managed to stave off the insolvency process, accepted by National Company Law Tribunal’s Mumbai bench in May, when it decided to settle its dues with Swedish equipment maker Ericsson for Rs 550 crore before the National Company Law Apellate (NCLAT).
Ericsson, which had signed a seven-year deal in 2014 to operate and manage RCom’s nationwide telecom network, had a alleged that it had not been paid the dues of over Rs 1,000 crore and had fought an eight-month battle with the operator.
While accepting the settlement agreements, the appellate tribunal had then ordered that in case RCom and its units do not pay Ericsson the promised amount by the due date, which is September end, then all the proceeds from its asset sale will be reversed and the telco will be pushed into insolvency again.
According to legal sources present in SC on Friday, lawyers representing RCom said that both bankers and buyers had protested against this clause. While Jio is wary that if later on challenged by Ericsson, the sale will be revoked, bankers are afraid that their recovered money would be lost as well.
Sources in Ericsson said that it will wait for directions from its headquarters in Sweden. “RCom may say we have come to settlement, but the payment is yet to happen. Until we get our money, why should we allow them to get those clauses removed,” said a person aware of the developments.
RCom is facing other hurdles to its asset sale to Jio as well. This week, it moved the telecom tribunal against the department’s show-cause notices that sought to cancel the telco’s licenses and revoke allocated spectrum, saying such a move will scuttle its deal to sell airwaves to Jio and push the Anil Ambani-owned carrier into the bankruptcy process again.