More trouble for RCom: China Development Bank files insolvency case

More trouble for RCom: China Development Bank files insolvency case
28 Nov 2017

There's more trouble brewing for Anil Ambani's debt-ridden Reliance Communications as China Development Bank (CDB) filed an insolvency case against it.

CDB is the first bank to file insolvency case against RCom for recovering $1.78-billion, approximately Rs. 11,460-crore, which accounts for 37% of the telco's total debt.

It was filed with National Company Law Tribunal under the Insolvency and Bankruptcy Code.

Here's more!

No out of the court settlement?
Reason

CDB's insolvency petition in NCLT reportedly "negates any hopes of an out of court settlement" between the struggling telco and lenders.

A source stated: "What else is it (CDB) to do? This is the only hope of some recovery; otherwise…most of the debt in RCom is lost."

The move would affect RCom's strategic debt restructuring (SDR) scheme undertaken in September by some banks.

RCom "surprised" by CBD's action
Reaction

Following the CDB's move, the Anil Ambani-owned telco stated it is "surprised by the untimely and premature action (of CDB)."

RCom stated it would continue to be engaged with all the lenders, including CDB; it is confident and committed to coming up with a resolution with the lenders' support.

However, the telco also said it was served no notice of CDB's petition with NCLT.

Who is representing CDB at NCLT?
NCLT

CDB's move comes only two months after the proposed RCom-Aircel merger was called off.

While senior Bombay HC advocate, Darius Khambata, would continue to represent CDB, Abhilash Lal was appointed the independent resolution professional by the Chinese bank, and Alvarez & Marshal (A&M) would be his advisors in NCLT.

Earlier, Khambata appeared on behalf of CDB in its objection against RCom-Aircel merger.

Previous bankruptcy petitions against Reliance Communications
Details

CDB's lawsuit is the fourth against RCom after its merger with rival Aircel was canceled.

In Sep'17, Sweden-based device maker Ericsson moved the NCLT to recover Rs. 1,150cr.

Tech Mahindra filed insolvency petition for recovering Rs. 8.2cr; however, it later agreed with RCom for an out of court settlement.

Earlier in November, Manipal Technologies moved National Company Law Appellate Tribunal for recovering Rs. 2.74cr.

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