Reliance Communications’ agony extended to March as bankruptcy court delays hearing
India’s company court has deferred hearing Reliance Communications’ bankruptcy plans until 6 March because of an objection by Ericsson.
In a hearing in New Delhi, the court said that it could not hear RCom’s request at the moment because the Supreme Court was also considering the fate of the company.
Ericsson had asked the Supreme Court to hold up any break-up or sale proceedings as it already has a case pending. Last month Ericsson asked that the company’s chairman, Anil Ambani (pictured), be jailed for non-payment of a debt of 5.5 billion rupees ($78.9 million).
RCom failed to pay even a portion of the outstanding debt, prompting Ericsson to put a winding-up order to the Supreme Court.
The Supreme Court is also considering a petition for contempt of court by RCom against the government’s Department of Telecommunications (DoT), which has blocked RCom’s sale of spectrum to rival company Reliance Jio.
The National Company Law Appellate Tribunal (NCLAT) said it could not consider RCom’s petition until the Supreme Court had acted. It added that no one can sell, alienate or create third party rights over RCom’s assets without its own or the Supreme Court’s permission.
RCom went to the National Company Law Tribunal (NCLT), India’s corporate bankruptcy court, this month seeking a “strategic monetisation” of its subsea subsidiary, Global Cloud Xchange (GCX), and other assets.
It wants to sell GCX plus its data centre business and its Indian enterprise telecoms business in one lot – and late last year was considering two bids, each for $1.1 billion. But the company was also banking on being able to sell its spectrum to Reliance Jio, which is controlled by Anil Ambani’s brother Mukesh Ambani.
Now all assets are frozen until the courts decide on RCom’s fate – with the risk that the two bidders that were interested last year will go away, or be able to win the business with a lower bid as the operation is broken up in a fire sale.