Reliance Communications (RCom) announced it would apply to begin insolvency proceedings with Indian authorities after failing to sell assets required to settle its debts.
In a statement, the company said its board had reviewed the progress of a debt resolution plan struck in June 2017 and noted “despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway.”
This, it added, was due to an inability to agree a deal with all its lenders and “numerous legal issues at high courts, Telecom Disputes Settlement and Appellate Tribunal and Supreme Court”.
It will now file for fast-track resolution with India’s National Company Law Tribunal, which deals with insolvency proceedings.
“The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days,” it added.
Action taken will only impact RCom and subsidiaries Reliance Telecom and Reliance Infratel. Other subsidiaries and related companies will continue as normal.
RCom’s move comes as the company is embroiled in a lengthy legal row with Ericsson, which sought to recoup $180 million in unpaid dues. The two eventually settled on $75.3 million.
After missing deadlines for payment, RCom was given a series of extensions by courts and made a partial payment with the promise it would pay after the completion of the sale of assets to rival Reliance Jio.
However, the Department of Telecommunications eventually turned down the asset sale.
Ericsson is not the only company owed money. At the end of its last financial year (end-March 2018) RCom’s net debt was INR465 billion ($7.1 billion).