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RCOM exits bankruptcy proceedings; agrees to pay Rs 5.5 billion to Ericsson

May 31, 2018

Reliance Communications (RCOM) has agreed to pay Rs 5.5 billion to Ericsson to settle its eight-month long legal tussle with the vendor. With this, RCOM can exit bankruptcy proceedings and move forward with its asset sale to Reliance Jio Infocomm Limited (RJIL) and Brookfield to repay lenders.

The companies presented the settlement details to the National Company Law Appellate Tribunal (NCLAT), post which the two-member bench halted the insolvency proceedings ordered by the National Company Law Tribunal (NCLT) against RCOM and its subsidiaries Reliance Telecom and Reliance Infratel.

The appellate tribunal directed RCOM to file an undertaking within a couple of days to pay Rs 5.5 billion to Ericsson by September 30, 2018. At the next hearing scheduled on October 4, 2018, Ericsson will confirm receipt of the same. In the event of RCOM’s failure to make the payment, the sale of its assets or the money recovered by the banks will be reversed and insolvency proceedings will be reinitiated.

The interim resolution professionals (IRPs) have been directed to stand back with instructions that any failure to carry out the undertakings will mean they will take over the company’s management again.

Earlier, Reliance Infratel reached an amicable settlement with its minority investors. RCOM has agreed to pay Rs 2.32 billion to the minority investors, which include HSBC Daisy Investment. Ericsson had moved the NCLT to initiate bankruptcy proceedings in a bid to recover over Rs 10 billion from the companies.

 
 

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