R-Com goes for wind-up hearing
Insolvency proceedings against the Anil Ambani-company will now restart at the NCLT
- Published 1.05.19, 12:50 AM
- Updated 1.05.19, 12:50 AM
- 2 mins read
Reliance Communications Ltd (R-Com) is back at the bankruptcy court as the National Company Law Appellate Tribunal (NCLAT) on Tuesday approved its application to lift a moratorium on its insolvency.
Insolvency proceedings against the Anil Ambani-company will now restart at the National Company Law Tribunal (NCLT), Mumbai.
However, Ericsson may now have to return the Rs 550 crore it had received following a Supreme Court order R-Com on March 18 had paid Ericsson with money received from Anil elder brother Mukesh, a day before the expiry of a deadline set by the Supreme Court on the payment. Provisions of the Insolvency and Bankruptcy Code state financial creditors get preference over operational creditors, meaning the Swedish telecom gear maker may have to return the settlement amount of Rs 550 crore.
In February, R-Com had moved the appellate tribunal to withdraw an earlier appeal to stay the proceedings for insolvency so that it can move ahead with a resolution plan through the NCLT.
R-Com in May last year had filed a petition before the NCLAT against an NCLT order on a plea by Ericsson. The appellate tribunal had on May 30, last year, stayed the operations of the NCLT orders.
During the proceedings at the NCLAT on Tuesday, senior advocate Kapil Sibal, representing R-Com, informed the bench about the company’s decision to withdraw the petition against the NCLT’s order. An NCLAT bench headed by chairman Justice S.J. Mukhopadhaya allowed the company to withdraw its petition.
Earlier, the two-member bench headed by Justice. Mukhopadhaya had observed that if insolvency proceedings against R-Com were allowed, Ericsson would have to return Rs 550 crore.
“Why one party will take amount and let the financial creditors suffer,” the NCLAT had then said. It added either it may quash R-Com bankruptcy proceedings in the NCLT or allow the bankruptcy case to proceed. In February, the tribunal had said that until its further orders or that of the Supreme Court, no one can sell, alienate, or create third-party rights over R-Com’s assets.
R-Com in early February had announced it had decided to opt for insolvency proceedings following its failure to sell assets to pay back its lenders.
“Accordingly, the board decided the Company will seek fast-track 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 had said.
In December 2017, both R-Com and Reliance Jio had entered into a deal for the sale of spectrum and other assets. However, the deal fell through as it faced regulatory hurdles.