Insolvency woes: RCom resolution professional asks for 13-month exclusion

NCLT tells interim RP's counsel to file separate plea

The interim resolution professional of Reliance Communications (RCom) has sought an exclusion of 13 months (April 30, 2018-May 30, 2019) in RCom’s corporate insolvency resolution process (CIRP). 

This is because the initial insolvency proceedings against the debt-ridden telecom company was stayed by the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.

Under the Insolvency and Bankruptcy Code (IBC), a maximum of 270 days is allowed for completing the resolution process, which has passed if the exclusion is not granted.

The tribunal has asked the interim resolution professional’s (RP’s) counsel to file a separate application. The case will now be heard on May 30.

Lenders led by State Bank of India (SBI) also appealed to the tribunal that they want to change the RP in the case as the interim RP operating now was appointed by operational creditor Ericsson.

The financial creditors have dues to the tune of Rs 46,000 crore. Hence, they have asked the tribunal to direct the interim RP to expedite the process.

The Mumbai Bench of the National Company Law Tribunal (NCLT), headed by V P Singh and R Duraisamy, has asked the interim RP to file a progress report on the CIRP process of the beleaguered telecom company.

The bench observed that stay on the insolvency process of RCom, Reliance Telecom and Reliance Infratel has been vacated by the NCLAT, and hence the NCLT-appointed interim RP will have to file the progress report by May 30.

Ericsson, in September 2017, had originally filed insolvency proceedings against RCom. This was accepted by the NCLT over failure to pay dues to the tune of Rs 1,500 crore. However, it was later stayed by the NCLAT as both the parties reached a settlement with RCom agreeing to pay Rs 550 crore to Ericsson by September 30, 2018.

Meanwhile, RCom moved Supreme Court, seeking extension of the deadline to pay the amount to Ericsson because of delay in completion of spectrum sale and other assets to which the apex court granted it time till December 15, 2018.

After RCom had failed to pay the agreed amount, Ericsson had moved Supreme Court wherein the court ordered Anil Ambani, Reliance Telecom chairman Satish Seth, and Reliance Infratel chairperson Chhaya Virani to pay Rs 453 crore within four weeks (March 18, 2019) or face a jail term of three months. Ambani had paid by the deadline.

Ericsson was opposed to RCom’s move of undergoing insolvency proceedings as it would then have to let go off the money it has received. Under insolvency proceedings, dues of financial creditors are settled first and operational creditors get paid only after that. The appellate tribunal had observed that in case insolvency proceedings against RCom and two other companies are restarted, Ericsson may have to refund the money.