Mumbai: Lenders to debt-ridden Reliance Communications Ltd (RCom) have decided to oppose China Development Bank’s insolvency petition against the firm, RCom said in an exchange filing on Thursday.

The company said 31 lenders, both domestic and foreign banks, had decided to come together to oppose the petition before the Mumbai bench of the National Company Law Tribunal (NCLT).

“The lenders also decided to appoint J Sagar Associates as their legal counsel to oppose the said China Development Bank petition at the admission stage itself," said RCom, a part of Anil Ambani’s Reliance Group.

China Development Bank filed the case on 24 November. Law firm Trilegal is advising the Chinese lender. The telecom company owes close to $2 billion in syndicated loans to China Development Bank. RCom’s total debt was Rs44,345 crore at the end of fiscal 2016-17.

“More than opposing the petition, the Joint Lenders’ Forum (JLF) wants to put forth the point that there is a resolution process already underway through the strategic debt restructuring (SDR) scheme and hence there is no need to go ahead with the insolvency petition at this stage," said a person aware of the development.

China Development Bank pulled the trigger after RCom had received a breather on interest payments till December 2018 under the SDR plan that was implemented in June. It joined RCom’s operational creditors—Ericsson India Ltd and Manipal Tech Ltd—which had already filed bankruptcy petitions against the telecom company.

The lenders had invoked SDR after the company presented a restructuring plan that involved hiving off and merging its wireless business with Aircel Ltd’s and selling a majority stake in its tower unit to Brookfield Infrastructure.

The merger with Aircel fell through, and on 20 October, the company presented a fresh debt repayment plan to its creditors. Under the new plan, the company envisages raising Rs27,000 crore through sales of assets including spectrum, real estate and towers. It said a further Rs7,000 crore will get reduced after lenders convert debt into equity for a 51% stake.

Earlier this month, RCom had defaulted on the coupon payment on its 2020 dollar bonds, the first such default by an Indian company since the insolvency code was passed in May 2016.

Domestic banks are also fighting the insolvency petition as it entails higher provisioning. The Reserve Bank of India has mandated banks to set aside 50% provisioning against secured exposure and 100% against unsecured exposure in all cases referred for bankruptcy proceedings.

“The lenders are disputing the claims of China Development Bank in order to buy some time for themselves. If the case gets admitted now, they will have to make provisions in the current quarter itself. Disputing the claims in a court of law will delay the hit on their books on account of provisioning," said a senior banker on condition of anonymity. Some experts said that if the NCLT rejected the case, it may well set a bad precedent.

“If there has been a default and there are all the valid reasons for a company to be admitted under the IBC, the court should not be guided by other contentions. The group of Indian lenders may, however, persuade China Development Bank to withdraw the petition for commercial reasons, said Kumar Saurabh Singh, partner at law firm Khaitan & Co.

On Thursday, shares of Reliance Communications Ltd (RCom) rose 1.20% to Rs12.60 apiece on the BSE while the benchmark Sensex shed 1.35$ to end the day at 33,149.35 points.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.