RCom states at liquidation following NCLAT judgment
Unless the Supreme Court overturns the NCLAT order, liquidation of RCom and RTL will result in a loss of ₹40,000 crore to
By : Legal Era
Update: 2021-04-19 12:30 GMT
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RCom states at liquidation following NCLAT judgment Unless the Supreme Court overturns the NCLAT order, liquidation of RCom and RTL will result in a loss of ₹40,000 crore to 38 lenders Reliance Communications (RCom) is all set to undergo the liquidation process following the National Company Law Appellate Tribunal (NCLAT) order. The NCLAT order states that the spectrum owned by RCom...
RCom states at liquidation following NCLAT judgment
Unless the Supreme Court overturns the NCLAT order, liquidation of RCom and RTL will result in a loss of ₹40,000 crore to 38 lenders
Reliance Communications (RCom) is all set to undergo the liquidation process following the National Company Law Appellate Tribunal (NCLAT) order.
The NCLAT order states that the spectrum owned by RCom can be sold under the insolvency process after government dues are cleared.
RCom owes ₹26,000 crore to the Department of Telecommunications in adjusted gross revenue (AGR) dues.
If the liquidation process of RCom and another Anil Ambani promoted firm Reliance Telecom Limited (RTL) are carried out, 38 lenders including the China Development Bank (₹9,000 crore), State Bank of India (₹3,000 crore) and Life Insurance Corporation of India (₹3,700 crore) stand to lose ₹40,000 crore, unless the Supreme Court decides to overturn the NCLAT order. RCom was sent to NCLT for debt resolution after it defaulted on ₹46,000 crore of debt.
The Committee of Creditors (CoC) for RCom is expected to file an appeal with the Apex Court against the NCLAT order.
RCom lenders have not received a single penny since June 2017. Faced with the uncertainty following the NCLAT order, they are set to seek clarity about their fate from the Top Court.
RCom and RTL assets primarily include spectrum and real estate.
The NCLAT, in its order passed last week, had said that spectrum could not be treated as 'security interest' by lenders. The tribunal also held that the government was an operational creditor.
The Apex Court had in the past had held in the matter of 'Ghanashyam Mishra and Sons Private Ltd vs Edelweiss Asset Reconstr¬uction Company Ltd' that operational creditors cannot claim any amount over and above the resolution plan as approved by the CoC.
It is apparent that the DoT, as an operational creditor, cannot recover any adjusted gross revenue (AGR) dues ahead of financial creditors under the existing circumstances.
The resolution plan of RCom and RTL was duly cleared by 100 per cent of lenders and is awaiting approval of the NCLT, Mumbai, since March 2020.