In a surprise intervention in the Reliance Communications (RCom) insolvency matter, Doha Bank, which is one of the financial creditors to RCom’s subsidiary Reliance Infratel, has moved the National Company Law Tribunal (NCLT) seeking a stay on the decisions of the meeting of the committee of creditors (CoC) held on Thursday.
Doha Bank has alleged that the corporate bank guarantees given by Reliance Infratel for RCom have been invoked by the banks and this, in turn, has increased Reliance Infratel’s debt significantly.
The invoking of corporate guarantees by banks has resulted in a significant reduction in the voting rights of a syndicate of four banks, including Doha Bank, which together had an exposure of around Rs 1,400 crore in Reliance Infratel. The counsel, appearing on behalf of Doha Bank, said that the four banks earlier had a 55 per cent voting right in the Reliance Infratel CoC. But now, with banks invoking the corporate guarantees, and interim resolution professional accepting the claims, their voting rights have been reduced to 15 per cent.
Doha Bank also said that the interim resolution professional had admitted the claims of the banks that have invoked such bank guarantees without informing the four syndicate banks. This, it said, marginalises them in the CoC. The matter will be next heard on May 31. Separately, the interim resolution professional filed the progress report on RCom’s corporate insolvency resolution process (CIRP) to the tribunal. In the last hearing, the tribunal had asked the interim resolution professional to submit the progress report of the CIRP and had granted exclusion of 357 days spent in litigation from the CIRP process.
The CoC meet on Wednesday was supposed to review the claims admitted and appoint a resolution professional. Lenders voted in favour of appointing Deloitte as the resolution professional. RBSA Advisors was the interim resolution professional.
The CIRP of the debt-ridden telco resumed after the National Company Law Appellate Tribunal (NCLAT) vacated the stay on the CIRP of RCom.
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, insolvency was later stayed by the NCLAT as both parties reached a settlement, with RCom agreeing to pay Rs 550 crore. 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 failed to pay, Ericsson moved the SC wherein the court ordered Anil Ambani, Reliance Telecom Chairman Satish Seth, and Reliance Infratel Chairperson Chhaya Virani to pay Rs 453 crore by March 18, or face a jail term of three months. Anil Ambani later paid the amount.
Ericsson has been opposed to RCom’s move of undergoing insolvency proceedings. Under proceedings, dues of financial creditors are settled first and then operational creditors get paid. The NCLAT observed in case proceedings against RCom and two other firms were restarted, Ericsson might have to refund the money.
Source: Business-Standard