The beleaguered telecommunication company Reliance Communications, which is saddled with huge debts from various Indian lenders and is in the process of shutting down many of its operations, faces threat from abroad which could upset its efforts to reach an out of courts settlement with lenders.
China Development Bank, which lent close to US$ 1.78 billion to Reliance Communications, has filed an insolvency suit at the National Company Law Tribunal’s (NCLT) Mumbai bench after the latter defaulted on loans. The Chinese bank moved NCLT on November 24.
Indian lenders plan to oppose the China Development Bank’s petition as they are already working on a debt resolution plan with the company, reports Business Standard.
The Chinese bank’s move comes weeks before Indian lenders are set to take a call on conversion of the Anil Ambani-owned firm’s debt worth Rs 457 billion (US$ 7.09 billion) into equity, and could lead to legal complications.
According to the Insolvency and Bankruptcy Code, once a company is referred to the NCLT and if the court finds merit in the petition, the court appoints a resolution professional and suspends the firm’s board of directors. The resolution professional then calls for bids for the company’s assets.