RCom creditors to demand Rs 580 crore from Ericsson; contends IBC violation
Anil Ambani-owned bankrupt telecompany Reliance Communications (RCom)'s lenders plan to demand Ericsson to return Rs 580 crore the Swedish telecom equipment maker received from the erstwhile teleco.
The lenders assert that the payment made to Ericsson is eligible as a 'preferential transaction' under the Insolvency and Bankruptcy Code (IBC). SBI-led lenders' consortium is likely to communicate it formally to Ericsson soon, sources told the Economic Times. RCom was admitted in the National Company Law Tribunal for insolvency proceedings in February becoming the first Anil Ambani group company to be officially declared bankrupt.
However, in case Ericsson rejects the demand to refund the amount, the lenders may be forced to explore legal options, the report said.
A 'preferential transaction' comprises paying a single creditor or set of creditors before other lenders whose claims according to the IBC grade higher in order of importance. Meanwhile, in this case, Ericsson is eligible as an operational creditor as it offered services to RCom, thus, the payment to the Swedish firm before other secured financial creditors such as banks violated insolvency law, the report added.
Meanwhile, an Ericsson spokesperson told the news daily that no such request has been received by it from RCom's creditors. But, a source close to the company said the sum has been received as a part of contempt proceedings which were filed by Ericsson against RCom in the Supreme Court after the teleco refused to pay for the services rendered to it.
The Supreme Court had in February held RCom Chairman Anil Ambani and two more directors guilty of contempt of court in a petition filed by Ericsson India against him over non-payment of dues worth over Rs 550 crore. The other two directors who were found guilty include Reliance Telecom Chairman Satish Seth and Reliance Infratel Chairperson Chhaya Virani. In its judgement, the Supreme Court had said that Anil Ambani and the two directors had to pay Rs 453 crore to Ericsson India in four weeks, failing which they could be jailed for at least three months. The SC also imposed a fine of Rs 1 crore each on them.
Ericsson had been fighting it out with RCom in court for over 18 months before it received a favourable order and got its dues. The Swedish company had also dragged RCom to NCLT for initiation of insolvency proceedings in May 2018 to recover its dues. It had agreed to stop legal action after the telecompany committed to an upfront payment.
Ericsson finally pulled RCom to the Supreme Court after the latter retracted on its assurance.