Banks say they are trying to stave off the need to provision 50% of their exposure once the account comes to the NCLT
Reliance Communications (RCom) on Thursday said 31 of its domestic and overseas lenders have opposed the China Development Bank's insolvency filing to recover $1.78 billion.
Banks say they are trying to stave off the need to provision 50% of their exposure once the account comes to the NCLT.
According to the Insolvency and Bankruptcy Code (IBC), even if the Chinese banks are filing the suit, the domestic lenders will also become party to it with the IBC mandating the formation of the committee of creditors (CoC). RCom owes a consortium of Indian banks led by State Bank of India about Rs 45,000 crore.
RCom said in a release, "At a committee of creditors meeting on 29 November 2017, a majority of the lenders, foreign and Indian, aggregating 31, decided to oppose China Development Bank's (CDB) insolvency petition against RCom before the National Company Law Tribunal (NCLT)." It said that the lenders also decided to appoint J Sagar Associates as their legal counsel to oppose the CDB petition at the admission stage itself.
CDB, which accounts for 37.11% of RCom's total secured debt, filed its petition on November 24. RCom had earlier said it was 'surprised' at the 'untimely' action of the Chinese bank.
The domestic lenders had invoked a strategic debt restructuring for the company in June this year, which had a standstill clause where the repayments will be allowed to be held back for a period of six months. The standstill clause is on till December 28, the date by when the company will have to make its repayments to the banks.
The development comes almost two months after RCom called off its proposed merger with rival Aircel.
This is the fourth case slapped against RCom post its plans of merger with Aircel fell apart.
Swedish telecom equipment maker Ericsson earlier moved the bankruptcy court to recover Rs 1,150 crore dues from RCom. Its application is yet to be admitted by the court.
Manipal Technologies has also approached the National Company Law Appellate Tribunal (NCLAT) to recover Rs 2.74 crore. RCom in a statement on November 15 had said NCLT did not accept the case of Manipal Tech. Tech Mahindra, an IT company, too, had filed an insolvency petition against RCom, but later both parties agreed to settle dues worth Rs 8.2 crore out of court.
Last month, RCom applied for a fresh "zero write-off" plan to its lenders, under which banks could convert about Rs 7,000 crore of debt into equity to hold 51% stake in the telecom operator. Banks could then raise funds by selling the telco's towers and spectrum to potential buyers.
KEEPING AFLOAT
- Banks say they are trying to stave off the need to provision 50% of their exposure once the account comes to the NCLT
- The domestic lenders had invoked a strategic debt restructuring for the company in June this year
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