The National Company Law Tribunal (NCLT) in Mumbai has directed that the insolvency resolution plan which will see an arm of Reliance Jio take over Reliance Communications’ bankrupt tower and fibre unit be implemented “as quickly as possible”.
As per the orders of the NCLT made public on Wednesday, the court allowed Jio’s arm, Reliance Project and Property Management Services Ltd (RP&PMSL) to deposit Rs 3720 crore in a State Bank of India escrow account as part of the Reliance Infratel Ltd. (RITL) insolvency resolution plan.
“…this Bench is of the view that an Escrow Account should be permitted to be opened in the State Bank of India, and the total value of the Resolution Plan should be deposited in that account,” the order by the two-judge bench comprising Shyam Babu Gautam and P.N. Deshmukh, said. “Monitoring Committee and the Respondents herein is also directed to make all endeavours to implement the Resolution Plan as quickly as possible, adhering timeline.”
Earlier this month, Jio had moved the NCLT to speed up the acquisition of Reliance Infratel. The matter had been stuck since there was no consensus on how the funds raised from the acquisition will be distributed among the creditors, which include the likes of SBI, Emirates Bank and Doha Bank.
“Further, the distribution of the amount so deposited in the escrow account shall be in terms of the order passed by the Hon’ble Apex Court and after obtaining permission/orders from this Bench,” the NCLT ruled.
In separate notices to the stock exchanges, Reliance Industries, the parent of Reliance Jio, and RCom, parent of RITL, confirmed the order, bringing the bankruptcy resolution of the Anil Ambani company to a close after two years.
The BSE had sought clarification regarding news reports that the NCLT has directed an amount of Rs 3720 crore to be deposited in an SBI escrow account, as part of the resolution plan for RITL.
RP&PMSL was the resolution applicant in the Reliance Infratel bankruptcy resolution process. It had in November 2019 presented a resolution plan involving a payment of Rs 3, 720 crore to acquire the tower and fibre assets of the bankrupt RCom company. The panel of creditors had approved the plan on March 4, 2020.
In its latest petition, RP&PMSL had also said that on payment of the resolution sum, it should be discharged from its obligations, and all that would remain would be the inter-se distribution among RITL’s creditors, subject to the outcome of the legal proceedings in the Supreme Court.
While this step of the corporate insolvency proceedings around the RCom unit may have been resolved, other aspects continue to be in a limbo.
One of the key assets in the process is the spectrum owned by the insolvent telco. However, the company is embroiled in a battle regarding this as the Department of Telecommunications has argued that since spectrum is a national resource, it cannot be sold as part of the insolvency proceedings.
Additionally, the company’s telecom licence expired last year, which means it does not have the right to use the spectrum it owns. Once the company loses the right to spectrum, the asset (spectrum) has little to no value, analysts observed. The Indian banks, vendors and other creditors have made claims of around Rs86,000 crore on RCom under the insolvency proceedings.
