Anil Ambani Group’s Reliance Communications has given up on reaching a debt resolution plan acceptable to all its lenders and has decided to start bankruptcy proceedings at the Mumbai National Company Law Appellate Tribunal.
The original plan, unveiled in 2017, envisaged a step-by-step asset sale process through which the company planned to raise tens of thousands of crores of rupees. The money was to be paid to its creditors, including banks, bondholders and other financial institutions.
It had also made much headway with the planned asset sales, including part of its deal with Reliance Jio, the firm led by Mukesh Ambani, the brother of Reliance Communications’ Chairman Anil Ambani.
However, said RCom, it has not been able to get all the lenders on the same page as far as sharing the proceeds of the monetization process is concerned.
“..despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetization plans, and the overall debt resolution process is yet to make any headway,” the company said today.
“This unfortunate outcome is attributable to the following key unresolved challenges:
“Lack of 100% approvals and consensus, as mandated by RBI’s 12th February 2018 circular, on all important issues, amongst over 40 lenders, Indian and foreign despite the passage of 12 months and over 45 meetings (and) pendency of numerous legal issues at High Courts, TDSAT and Supreme Court impeding progress at various stages.
“Accordingly, the Board decided that the Company will seek fast track resolution through NCLT, Mumbai,” it said.
“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,” it added.
RCOM and only two of its subsidiaries, Reliance Telecom Ltd. and Reliance Infratel Ltd., will take appropriate steps shortly to implement the Board decision.
“There will be no impact on the business and operations of other subsidiaries of the Company, including inter alia GCX, Reliance IDC, etc,” it added.
The NCLAT process involves the appointment of an external debt resolution officer, who will be in charge of most affairs of the company and will strive to generate the best solution possible for all stakeholders.
The debt resolution process was initiated in June 2017, when the company had an estimated Rs 45,000 cr of debt.