Ericsson had received the sum of Rs 580 crore from RCom as a Supreme Court-monitored settlement, pending insolvency proceedings on RCom in NCLT.
Swedish telecom network company Ericsson has moved the Supreme Court against potentially having to return Rs 580 crore to Reliance Communications according to an NCLAT observation if the Anil Ambani-led firm resumes insolvency proceedings. The Supreme Court will hear Ericsson’s plea in July this year, CNBC TV18 reported.
Ericsson had received the sum of Rs 580 crore from RCom as a Supreme Court-monitored settlement, pending insolvency proceedings on RCom in NCLT (National Company Law Tribunal, Mumbai). RCom’s last-minute payment to Ericsson saved chairman Anil Ambani from going to jail.
The insolvency proceedings upon RCom initiated by Ericsson in May 2018 were put on stay, with RCom promising to pay Rs 550 crore to Ericsson. Now that RCom has decided to vacate its stay application and resume insolvency proceedings, the NCLAT (National Company Tribunal of Law Appellate) said that Ericsson may have to return the money in this case. Meanwhile, NCLAT will hear RCom’s plea on vacating the stay on insolvency on 30 April 2019.
Also Read: Why Ericsson may be asked to return Rs 580 crore to RCom; all that happened so far, and what’s next
Under IBC provisions of 2016, financial creditors precede operational creditors in terms of payback. Since Ericsson is an operational creditor, its claim on the recovery of dues from RCom is down the priority order after other secured creditors.
Ericsson had earlier refused to comment on the reports that it may have to return Rs 580 crore in dues that it recently recovered from Reliance Communications. When asked what would be Ericsson’s next step in the RCom case, Ericsson India head Nitin Bansal refused to comment stating that the matter is sub judice.
Ericsson and Reliance Communication got engaged in business transactions in 2013 but the relations soured in 2016 when RCom failed to pay dues. Ericsson was the first among the creditors to move NCLT in September 2017 after RCom repeatedly failed to compensate Ericsson for its networking services. After Mumbai bench of NCLT nodded for RCom’s insolvency proceedings, the company reached out to Ericsson with the proposal of upfront payment to avoid insolvency.