Its plan to sell physical assets to repay debts having failed, Anil Ambani’s Reliance Communications has applied for bankruptcy proceedings – the first Reliance Group company to do so.
Although RCom’s debt on its books is 460 billion rupees (US$6.54 billion) the lenders are expected to make a claim of around 900 billion rupees ($12.79 billion), Economic Times reports.
Indian and global banks – as well as operational creditors including telecom tower companies, mobile-phone companies and government – have started submitting demands to RBSA Advisors LLP, the interim resolution professional appointed by the National Company Law Tribunal to oversee the insolvency process.
The last date to send claims is May 21 and they will be in the form of “obliger and co-obliger,” which means that in addition to the debt of RCom and its two units Reliance Infratel and Reliance Telecom, the debt of other subsidiaries and step-down companies of the telecom major will also be taken into account, the daily added.
It is expected that the claim amount in this insolvency case will the highest in India’s corporate history. RCom was forced to shut its wireless operations late in 2017, dragged down by its debt and widening losses amid intense competition since the entry of Reliance Jio, owned by Anil Ambani’s elder brother Mukesh, in 2016.
It tried to sell its wireless assets, such as spectrum and towers, to Jio but failed due to a slew of legal cases, triggering its move to opt for insolvency proceedings under the insolvency and bankruptcy code.
Earlier China Development Bank, from which RCom had borrowed more than $1 billion, had dragged the company to the tribunal. That case was settled after RCom gave up a portion of its headquarters, Dhirubhai Ambani Knowledge City in Mumbai.
Swedish telco Ericsson also took RCom to NCLT in 2017 for non-payment. Finally, they agreed on a settlement of 5.5 billion rupees ($78.17 million). The amount was paid by Mukesh Ambani.
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RCom is the second telco in India to enter bankruptcy proceedings after Aircel, which filed for bankruptcy in February last year.