Reliance Communications (RCom) has stated that it will file for fast-track insolvency resolution with the Indian National Company Law Tribunal.
The operator group has taken the decision following a board review of its 2017 debt resolution strategy which found that “despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway.”
“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 said in a statement.
A number of factors have prevented RCom from divesting assets that it agreed to sell in order to pay down its debts. The operator noted that it had failed to reach an agreement with its creditors and to resolve “numerous legal issues at high courts, Telecom Disputes Settlement and Appellate Tribunal and Supreme Court”.
The insolvency proceedings will only concern RCom and its Reliance Telecom and Reliance Infratel units, with all other subsidiaries and related firms to continue operations as usual. The filing follows a long-running legal dispute with Ericsson, with the vendor claiming that RCom owed $180 million in unpaid fees.
RCom missed several repayment deadlines, but eventually the companies agreed a settlement of $75.3 million, with RCom making an upfront payment of $18.6 million and funding the remainder with the proceeds of an asset sale to Reliance Jio. However, this deal failed to procure the necessary approvals from the Department of Telecommunications.
RCom’s net debt stood at INR465 billion ($7.1 billion) at the end of its last fiscal year, closing in March 2018.
