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NCLT gives RCOM and Ericsson a week’s time to negotiate settlement over outstanding dues

March 12, 2018

The National Company Law Tribunal has given Reliance Communications (RCOM) and Ericsson a week’s time to negotiate a settlement over outstanding payment. Moreover, the bankruptcy court did not admit Ericsson’s insolvency petition against the operator. However, negotiations between the two to reach an out-of-court settlement have failed so far. The matter will be heard next on March 21, 2018.

In September 2017, Ericsson filed a petition in the NCLT, seeking liquidation of RCOM to recover Rs 11.50 billion that the company owed it. According to Ericsson, RCOM had not paid for equipment and services for two years and instead issued only a few post-dated cheques.

In the latest development, the Bombay High Court dismissed RCOM’s plea challenging the arbitration court's order restraining the sale or transfer of its assets without permission. The court dismissed all three appeals filed by RCOM and its two companies.

RCOM, which is reeling under the debt of Rs 450 billion, is fighting multiple legal battles. Earlier, it had entered into a deal to sell its wireless assets to Reliance Jio Infocomm Limited (RJIL), but the arbitration tribunal’s interim order has now put a hold on the deal. While the appeal against the order was rejected, RCOM stated that it would now approach a division bench of the Bombay High Court. Meanwhile, the Competition Commission of India approved RJIL’s proposal to acquire RCOM’s towers, optic fibre cable and right to use spectrum and media convergence nodes. RCOM is trying to sell its assets to RJIL for around Rs 250 billion to pare its debt. The company has shut its voice services in 2017 after it could not close on a merger deal with Aircel.


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