Anil Ambani's Reliance Communications share price skyrocketed 65% on last Thursday on media reports that the company was mulling out-of-court settlement with Swedish communications firm Ericsson. But RCom stock pared the gains on Friday when a Reuters report said that the settlement deal looked unlikely. Subsequently, RCom shares tumbled 9.37% intraday to Rs 15. The prospects of RCom-Ericsson settlement surfaced after National Company Law Tribunal (NCLT) ordered insolvency proceedings against the Anil Ambani company over Rs 1,150 crore unpaid dues to the latter. The development was also seen jeopardising the deal between Anil Ambani and his elder brother Mukesh Ambani to sell debt-ridden RCom to Reliance Jio. Anil Ambani's RCom late last year announced plans to sell most of its wireless assets to elder brother Mukesh Ambani's Reliance Jio. The deal is worth about Rs 26,000 crore, Reuters reported quoting sources. With a debt totalling about Rs 45,000 crore, RCom's deal with Jio was seen as a saviour. Now with NCLT ordering insolvency proceedings against RCom, it may prohibit Mukesh Ambani from acquiring the assets under the newly-adopted IBC. Meanwhile, RCom can choose to settle dues with Ericsson or can challenge the NCLT's decision. But if RCom does undergo insolvency proceedings, the first thing that is going to stand between the deal of Ambani brothers is the Section 29A of the Insolvency and Bankruptcy Code (IBC). "Once RCom is into corporate resolution process under the IBC. strictly speaking, Reliance Jio Infocomm Limited would be barred from bidding for RCom on account of Mukesh Ambani\u2019s relationship with Anil Ambani," Punit Dutt Tyagi, Executive Partner at Lakshmikumaran & Sridharan Attorneys, said to FE Online. Finance Minister Arun Jaitley late last year amended the IBC law by adding Section 29A to bar wilful defaulters, defaulting promoters, and related persons from bidding to acquire assets at a discounted price. "If Jio is to attempt to bid for the assets of RCom, it must first challenge the applicability of the definition of the related party under the IBC," Punit Dutt Tyagi said. Ericsson is an operational creditor to RCom and it stands a chance of attending the Committee of Creditors (CoC) meeting under the IBC process if its debt exceeds 10% of total admitted claims, Manoj K Singh, Founding Partner, Singh & Associates, said to FE Online. "However, should the CoC decide to liquidate the company, Ericson would stand at No. 6 in the priority for receiving any funds from the liquidation proceeds after the insolvency costs, secured creditor and workmen, employees, unsecured financial creditors and government dues," Manoj K Singh added. Ericsson, which was aggrieved that its claims were not addressed properly in the deal with Jio, can stand to benefit in a situation where there is a price war among the resolution applicants to take over RCom, he said. RCom on Friday confirmed that it is at an advanced stage of discussions with Ericsson to "expeditiously resolve" commercial issues. "This will enable Reliance Communications to exit the NCLT process," RCom said in a statement, adding that it is confident of proceeding with monetisation plan with Reliance Jio.