Reliance Communications claims all 31 lenders oppose China bank's insolvency plea
Anil Ambani-led RCom today claimed that a majority of its lenders are opposing China Development Bank's (CDB) decision to initiate insolvency proceedings against the embattled telco that's saddled with over Rs 45,000 crore of debt that has turned dud.
"At a committee of creditors meeting on November 29, a majority of them, both foreign and domestic, aggregating to 31, decided to oppose CDB's insolvency petition against RCom before the National Company Law Tribunal (NCLT)," Reliance Communications claimed in a statement.
The lenders will be opposing the petition by CDB, to which RCom owes $ 1.78 billion, at the admission stage itself and have decided to appoint J Sagar Associates as their legal counsel, the statement claimed further.
State Bank leads the consortium of domestic lenders to RCom. None of the bankers were available for comments.
The amount of provisions or the money to be set aside against receivables, shoots up massively once the insolvency proceedings begin in case of a defaulting company.
RCom is currently undergoing strategic debt restructuring, which entails bankers taking majority control of the company, and has time till December next year for sorting out the debt-related difficulties.
Late last month, after the collapse of multiple deals including the merger with Aircel which would have reduced its overall debt, it had presented a detailed plan to restructure its debt which is over Rs 45,000 crore, including converting Rs 7,000 crore of debt into equity by the banks to get a majority stake in the beleaguered telco.
RCom had on October 30 claimed under this plan, there would be zero write-off for the lenders used to taking haircuts in stressed assets and that this would make the company a sustainable and profitable.
The CDB had dragged RCom to the NCLT earlier this week seeking insolvency proceedings.
This is not the first time that someone has dragged RCom to the NCLT.
Mobile telephony equipment maker Ericsson had moved to recover dues of over Rs 1,100 crore, Manipal Technologies had approached the tribunal to recover Rs 2.74 crore (RCom claimed that this petition was not accepted) while software maker Tech Mahindra opted for an out of court settlement after approaching the tribunal to recover Rs 8.2 crore in dues.
All this led to the company calling of the merger with Aricel last month which if gone through would have given the embattled telco a much-needed succour.
Following severe cash-crunch, which led to poor service quality, the company had also discontinuation its 2G services.