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RCOM moves Bombay HC against arbitration court order barring sale of assets

March 07, 2018

In a statement to the stock exchanges, Reliance Communications (RCOM) has stated that it has moved the Bombay High Court to protect the interest of the secured lenders against an arbitration order that had restrained the operator from selling or transferring its assets without its permission. The interim order came in an arbitration battle being fought between Ericsson and RCOM with the equipment maker trying to recover its dues worth Rs 10.12 billion. It has been learnt that Ericsson too filed a caveat in the Bombay High Court to ensure that its views are heard before the court takes a call.

The arbitration court's interim order which would hold till the next date of hearing on June 9, 2018 was a body blow to the operator’s efforts to pare debt by end-March 2018 under a plan driven by its lenders. Therefore, RCOM which is in the midst of selling most of its wireless assets to Reliance Jio Infocomm Limited (RJIL) was forced to hasten its appeal to the higher courts.

Further, the arbitration court ruling stalls the company’s planned sale of most of its wireless assets including spectrum, tower, fibre and media convergence nodes to RJIL for over Rs 200 billion. The funds thus raised would be used to repay RCOM’s 35 lenders. But in case the operator fails to repay by the prescribed deadline, the lenders could take the company to the National Company Law Tribunal (NCLT) under the Insolvency & Bankruptcy Code, 2016, especially after the central bank scrapped all debt recasts.


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