 "Anil Ambani")
China Development Bank, Export Import Bank of China, and SC Lowy Asset Management, with a combined exposure of Rs 13,483 crore in bankrupt Reliance Infratel, have written to the Indian government to expedite the debt resolution process of the company which was initiated in May 2018.
In a communication to the Indian finance ministry and the Insolvency and Bankruptcy Board of India (IBBI), the lenders have expressed their concern that despite tight deadlines mentioned in the Insolvency and Bankruptcy Code, 2016, the debt resolution of Reliance Infratel is far from over which is leading to a massive loss to all lenders.
The banks also asked the Ministry of Corporate Affairs to impose penalties on those bidders who delay the entire process.
Reliance Infratel is the fibre and tower arm of Reliance Communications which was sent to bankruptcy court for debt resolution after it defaulted on debt worth Rs 41,055 crore. A separate process for Reliance Communications was also completed with UV ARC, an asset reconstruction company, winning the race but the matter is also pending in the court.
With an offer of Rs 4,400 crore, a subsidiary of Reliance Jio, Reliance Projects & Property Management Services (RPPMS) emerged as the successful bidder for the company but the matter is currently pending in the National Company Law Tribunal, Mumbai.
In its letter to the finance ministry, the bank said the NCLT approved the RPPMS resolution plan on December 3, 2020 and within days on December 28, an erstwhile promoter of Reliance Infratel obtained a stay order on the classification of the RITL account as fraud by State Bank of India from Delhi High Court. Reliance Infratel was promoted by the Anil Ambani family while Reliance Jio is owned by his older brother, Mukesh Ambani.
The Delhi High Court ordered status quo to be maintained but allowed the Indian Banks to file appropriate complaints with the Central Bureau of Investigation (CBI).
On January 5 2021, RPPMSL asked Stata Bank of India for a copy of the forensic audit report citing a "material adverse effect" on their resolution plan. In January, the SBI and Indian banks filed a complaint with the CBI against RITL and its erstwhile directors.
Later in May last year, RPPMS expressed its inability to implement the resolution plan to the NCLT until it was provided with a copy of the forensic audit report. State Bank of India informed the NCLT in June last year that it would withdraw the fraud tag against Reliance Infratel, once RPPMS resolution plan has been implemented. The SBI also stated that its fraud classification will not affect RPPMSL and its directors.
The Chinese banks said there have been no developments/ substantive hearings on this matter after June 2021, and the RPPMS application remains pending as on date.
In its letter, China Development Bank said RPPMSL is using the towers of RITL at a significantly discounted price and given this usage, the lenders continue to incur losses for the maintenance of these towers.
The Chinese bank said as RPPMS will be acquiring RITL on a clean slate basis (i.e., RPPMSL will not be liable for offences committed by RITL prior to the commencement of the CIRP, there is no legal rationale on the basis of which RPPMSL may further withhold the implementation of its resolution plan.
Besides, the bank said it is unfair for RPPMSLto delay the implementation of the resolution plan any further, and specifically, for reasons which will not affect the acquisition of RITL by RPPMS in any manner.
The Story So Far:
May 2018: Lenders send Reliance Communications, subsidiaries for debt resolution
March 2020: Committee of Creditors clear Rs 4400 crore offer by Reliance Jio's arm
Nov 2020: SBI, other banks tag Reliance Infratel as "fraud"account
Dec 2020: NCLT clears Reliance Jio subsidiary offer for Reliance Infratel
Jan 2021: Banks file complaint with CBI against RITL
May 2021: Reliance Jio arm seeks forensic report of RITL from lenders
June 2021: Banks withdraw fraud tag against Reliance Infratel, no hearing since then
