Following the National Company Law Tribunal (NCLT) directive, Reliance Communications (RCom) on Wednesday informed the stock exchanges that the administration of the corporate debtor would be taken over by the interim resolution professional (RP) and the corporate insolvency resolution process (CIRP) would resume.
“The powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional,” the company said in the filing.
The NCLT has also directed the interim RP to file a progress report of the CIRP. The next hearing is on May 30.
Operational creditor Ericsson, in September 2017, had originally filed for insolvency proceedings against RCom. This was accepted by the NCLT over RCom’s failure to pay dues to the tune of Rs 1,500 crore. However, it was later stayed by the National Company Law Appellate Tribunal (NCLAT) as both parties reached a settlement, with RCom agreeing to pay Rs 550 crore to Ericsson by September 30, 2018.
Meanwhile, RCom moved the Supreme Court, seeking an extension of the deadline to pay the amount to Ericsson because of a delay in completion of spectrum sale and other assets, to which the apex court granted it time till December 15, 2018.
After RCom had failed to pay the agreed amount, Ericsson moved the apex court wherein the court ordered Anil Ambani, Reliance Telecom Chairman Satish Seth, and Reliance Infratel Chairperson Chhaya Virani to pay Rs 453 crore within four weeks (March 18, 2019) or face a jail term of three months. Ambani had paid by the deadline.
Ericsson was opposed to RCom’s move of undergoing insolvency proceedings as it would then have to let go of the money it received. Under insolvency proceedings, dues of financial creditors are settled first and operational creditors get paid only after that. The appellate tribunal had observed that in case insolvency proceedings against RCom and two other companies were restarted, Ericsson might have to refund the money.
Source: Business Standards, May 9, 2019