The National Company Law Appellate Tribunal (NCLAT) on Monday agreed to hear plea filed by Swedish firm Ericsson against Anil Ambani's Reliance Communications (RCom) on February 12, while passing an interim order that no asset of the debt-laden company should be sold or transferred without its prior approval.
The National Company Law Appellate Tribunal (NCLAT) on Monday agreed to hear plea filed by Swedish firm Ericsson against Anil Ambani’s Reliance Communications (RCom) on February 12, while passing an interim order that no asset of the debt-laden company should be sold or transferred without its prior approval, CNBC-TV18 reported.
Ericsson moved NCLAT after RCom said it has decided to file for insolvency proceedings under the Insolvency and Bankruptcy Code. If RCom undergoes insolvency proceedings, Ericsson, which is an operational creditor, would be paid after financial creditors.
Since Ericsson’s claimed amount of Rs 1,150 crore was admitted by National Company Law Tribunal (NCLT) in May last year while hearing its petition to initiate insolvency proceedings against RCom, the Swedish company will have some edge over other operational creditors.
Ericsson will be an operational creditor with admitted dues. However, it will make no difference to its status. In case of resolution, Ericsson will get the percentage what other operational creditors would get.
The only difference would be that in case of Ericsson the amount would be admitted whereas in case of other operational operators their claims may be disputed,” Punit Dutt Tyagi, Executive Partner at Lakshmikumaran & Sridharan told Financial Express Online.
Here all you need to know about Ericsson’s story in RCom’s case
- RCom, which has a total debt of Rs 45,000 crore, owes Rs 1,150 crore to Ericsson.
- Ericsson moved court to initiate insolvency proceedings against RCom while it was undergoing debt-restructure, following which the Anil Ambani firm agreed to pay Rs 550 crore against the admitted claim of Rs 1,150 crore.
- The court gave 120 days to RCom to pay the dues, which ended on September 30, 2018.
- RCom informed the Supreme Court in advance that its deal with Mukesh Ambani’s Jio failed to proceed because of which it would not be able to pay Ericsson the agreed amount and requested an extension of the deadline.
- However, Ericsson moved the Supreme Court on 1 October 2018 seeking contempt of court proceedings against RCom for failing to pay dues.
- The apex court extended the deadline for repaying the debt until 15 December 2018, with an additional payment at 12% per annum for the months of delay.
- A couple of days before 15 December 2018, RCom told the SC that it won’t be able to repay Ericsson as Department of Telecommunication (DoT) did not clear its spectrum deal with Jio.
- On 4 January 2019, Ericsson once again moved the Supreme Court seeking initiation of contempt proceedings for the second time against Anil Ambani. Ericsson also sought to detain Anil Ambani and others in civil prison unless they purge themselves by making the payment.
- The Supreme Court then asked Anil Ambani to personally appear in court during the next contempt of court proceeding, while allowing it to make the payment of Rs 118 crore against the agreed amount of Rs 550 crore.
- On 1 February 2019, RCom said that it has decided to file for voluntary insolvency proceedings under IBC as the proposed deal with Jio failed to make any progress.