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Insolvency order against Anil Ambani's firms: RCom offers Rs 500 cr upfront payment to Ericsson

RCom and its two subsidiaries -- Reliance Infratel Limited and Reliance Telecom Limited -- owe around Rs 978 crore to Ericsson. They all had entered into a seven-year agreement with Ericsson in 2013 for operational services, including mobile towers, broadband, fixed line, wireless voice, etc.

twitter-logo BusinessToday.In   New Delhi     Last Updated: May 29, 2018  | 21:50 IST
Insolvency order against Anil Ambani's firms: RCom offers Rs 500 cr upfront payment to Ericsson
Anil Ambani Photo: Reuters

After Swedish networking company Ericsson decided to take the fight over non-payment of dues worth Rs 978 crore with debt-ridden RCom to the NCLT, the beleaguered telecom company on Tuesday came out with a fresh offer of Rs 500-crore upfront payment to Ericsson to settle the matter. RCom on Monday moved the National Company Law Appellate Tribunal (NCLAT) against the NCLT order to admit an insolvency petition filed by Ericsson against the company.

The appellate tribunal has now suggested the matter to be solved between the parties, if they wish to do so, and listed the matter for a hearing on Wednesday. RCom and its two subsidiaries -- Reliance Infratel Limited and Reliance Telecom Limited -- owe around Rs 978 crore to Ericsson. They all had entered into a seven-year agreement with Ericsson in 2013.

Ericsson provided all the operational services, including mobile towers, broadband, fixed line, wireless voice, and data, to the three companies but they failed to pay dues worth Rs 978 crore. However, the total outstanding dues now stand at Rs 1,600 crore against all three companies.

Anil Ambani's company has a total debt of Rs 46,000 crore. It was one of the casualties of the tariff war caused by Mukesh Ambani's Reliance Jio, which offered data plans at dirt-cheap prices. After facing huge losses, Anil Ambani-led company heaved a sigh of relief as it signed a deal to sell its wireless assets to Reliance Jio Infocomm for over Rs 25,000 crore in December 2017.

However, it had consistently failed to pay up a huge pile of dues to Ericsson, which on May 15 moved the adjudicating authority of the NCLT's (National Company Law Tribunal) Mumbai Bench.

During the hearing, senior advocate Kapil Sibal, appearing for RCom, suggested an upfront payment and the NCLAT bench headed by Chairman Justice SJ Mukhopadhaya suggested settlement between parties. "You know the fate of operational creditors (In corporate resolution process). You may not even get 5 per cent. If you want we would give you time for settlement," the bench said, reported PTI, adding that if they wanted settlement the court could allow it.

Once the resolution process is commenced against a company under the Insolvency and Bankruptcy Code (IBC), secured financial creditors are given the first priority over other creditors in the rights over the assets of the debtor company. So if the resolution process begins against RCom, Ericsson would be placed much down the list of priority.

During the hearing, Kapil Sibal also said RIL's Jio, which is buying RCom's assets, has offered Rs 17,000 crore of upfront payment along with spectrum dues and transfer of debts. Meanwhile, after the interim prayer of RCom to stay the NCLT order, the tribunal listed for the matter for hearing on Wednesday.

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