Reliance Communications lenders to seek Rs 580 crore from Ericsson claiming violation of IBC
Money was paid by Reliance Communications to Ericsson under Supreme Court order.
The decision was taken at a recent meeting of RCom’s committee of creditors, and the consortium of lenders led by SBI is likely to send a formal communication to Ericsson soon, according to two independent sources. RCom was admitted for insolvency proceedings in the National Company Law Tribunal in February.
Lenders may Move Court if Ericsson Refuses
If Ericsson refuses to refund the sum, the lenders may explore legal options, the sources said.
A ‘preferential transaction’ involves a payment to a single creditor or set of creditors ahead of others who are waiting in queue and whose claims rank higher in order of importance as per the IBC.
In this case, Ericsson qualifies as an operational creditor since it provided services to RCom. Hence, the payment to the Swedish company ahead of other secured financial creditors — such as banks — was in violation of the insolvency law, the sources claimed.
A spokesperson for Ericsson said the company had not received any request from RCom’s lenders. A source close to the company said the payment had been received as part of contempt proceedings filed by Ericsson against RCom in the apex court, after the latter refused to honour payments for services rendered to it.
“It is a policy of the bank not to comment upon individual accounts and their treatment,” an SBI spokesperson said in response to ET’s queries.
The Supreme Court had held RCom chairman Anil Ambani and two directors guilty of contempt on February 20 as they had failed to obey the court’s orders to deposit sums claimed by Ericsson. The trio was instructed to make the payment or face a jail term.
RCom eventually made the payment, accompanied by a statement from Anil Ambani thanking his elder brother Mukesh and sister-in-law Nita for their “timely support”. People familiar with the matter said Mukesh Ambani, the chairman of Reliance Industries, had contributed around Rs 480 crore for the Ericsson payment. These people said this was an outright payment by the RIL chairman and not a loan.
Ericsson had been battling RCom in court for over 18 months before it finally got a favourable order and received its dues.
The company had filed an application to take RCom to insolvency proceedings in May last year to recover dues, but agreed to halt the legal action after the telco promised an upfront payment. The assurance was backed by a personal guarantee from Anil Ambani.
Ericsson eventually dragged RCom to the Supreme Court after the latter reneged on its promise. Though RCom had initially opposed Ericsson’s plea to initiate insolvency proceedings against it, the embattled telco eventually withdrew its opposition.
Ericsson later claimed RCom was allowing itself to be subjected to insolvency proceedings to avoid paying it.
Financial creditors have claimed as much as Rs 85,000 crore as dues from RCom and two of its arms — Reliance Telecom and Reliance Infratel — after the companies were admitted for insolvency proceedings.
The parent and the two units collectively house spectrum, domestic fibre assets and telecom towers. RCom had shut its wireless telephony services business last year. Another RCom unit — Bermuda-incorporated Global Cloud Xchange, which houses the undersea cable business — is not part of the insolvency proceedings.