BUSINESS

NCLAT stays insolvency proceedings against RCom

Wrap up:NCLAT has fixed the next hearing on Oct. 4, when Ericsson will confirm it has received the amount.Reuters

Wrap up:NCLAT has fixed the next hearing on Oct. 4, when Ericsson will confirm it has received the amount.Reuters  

In a major relief to Reliance Communications, the National Company Law Appellate Tribunal (NCLAT) on Wednesday stayed insolvency proceedings against the debt-laden company, paving the way for sale of RCom’s assets worth Rs. 25,000 crore to Reliance Jio.

This was after the Swedish telecom equipment maker Ericsson, an unsecured creditor of RCom, agreed to an out-of-court settlement with RCom for Rs. 550 crore against its claims of Rs. 1,150 crore.

120-day deadline

A two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay directed the chairman/managing director/ directors of the RCom to give an undertaking that they would pay Ericsson the settlement amount within 120 days, failing which the sale of assets or money recovered by banks from sale to Reliance Jio, would be reversed. Confirming the move, a legal source in the know of the development said, “Both parties put their settlement deal in front of the appellate tribunal, after which NCLAT stayed the insolvency proceedings against RCom.”

The NCLAT has scheduled the next hearing for October 4, when Ericsson needs to confirm it has received the settlement amount. “RCom’s management and Board of Directors have been reinstated vide this order,” the company said in a statement. The asset sale includes spectrum, fiber, telecom towers, MCNs and certain real estate assets in Delhi and Chennai.

RCom shares rose 9.7% to close at Rs. 17.5 in a weak Mumbai market on Wednesday.

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