NCLT rejects RCom’s plea for stay on insolvency order1 min read . Updated: 17 May 2018, 09:32 PM IST
RCom had suggested an out-of-court settlement, according to a person close to the development
Mumbai: The National Company Law Tribunal (NCLT) on Thursday declined to admit a plea by Reliance Communications Ltd to keep the court’s insolvency order in abeyance as it is in talks with operational creditor Sweden’s Ericsson to settle the dispute.
“NCLT bench declined the application of Reliance Communications for stay of its own order, which means that the company will now be under insolvency resolution professional, who will be named by the bench, and powers of board of directors at the company will be suspended," said Ashwin Ankhad, founder and managing partner of law firm Ashwin Ankhad and Associates. During the course of arguments on Thursday, Ashwin Ankhad and Associates, which is representing Ericsson in the matter, and senior counsel Anil Kher, also representing the Swedish telecom equipment maker, suggested three names of resolution professional (RP), who would take over the company management once the NCLT approves the names.
RCom had suggested an out-of-court settlement, according to a person close to the development. “Ericsson has so far not received a formal corporate proposal for the settlement," he said. An Ericsson spokesperson said the company would not comment on market speculation.
On Tuesday, the NCLT approved the insolvency proceedings against Ericsson, which is seeking Rs1,155 crore from the company and two of its subsidiaries.
A spokesperson for RCom declined to comment on the development.
Considering that NCLT did not agree to keep the insolvency plea in abeyance, it also puts in question its deal with Reliance Jio. The asset sale would now be overseen by the RP.
In December 2017, Reliance Jio agreed to buy a majority of the wireless assets of RCom for an undisclosed amount. Both companies signed agreements for the sale of wireless spectrum, tower, optical fibre network and media convergence node assets.
At the end of March 2017, RCom has a debt of Rs45,733 crore on its books.
Navadha Pandey in Delhi contributed to this story
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