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The National Company Law Appellate Tribunal (NCLAT) has stayed the allocation of ₹4,400-crore proceeds from the sale of Reliance Infratel Ltd’s (RITL) tower and fibre assets. The appellate tribunal’s decision is based on an appeal filed by Doha Bank-led External Commercial Borrowing (ECB) loan syndicate.
This would mean that the Chinese banks led consortium, who were the indirect lenders to the company, would not get any proceeds from the resolution process of RITL.
RITL is a subsidiary of Anil Ambani-controlled Reliance Communications (RCom), which had filed for insolvency in 2019.
Earlier on December 3, 2020, the National Company Law Tribunal (NCLT) had approved RITL’s resolution plan, and provide ₹4,400-crore to the lenders, including the three Chinese banks: Industrial and Commercial Bank of China, Mumbai Branch; China Development Bank and Exim Bank of China.
The appellate tribunal also admitted an appeal by RITL’s ECB loan syndicate —Doha Bank, VTB Capital and Emirates NBD Bank — which challenged an earlier NCLT order.
On March 2, 2021, NCLT’s Mumbai Bbench had upheld a claim by the lenders of RITL that classified the indirect lenders as financial creditors of the company, based on a deed of hypothecation.
This would have a direct impact on their voting percentage in the Committee of Creditors of RITL and the ultimate distribution of amounts to them.
The appellate tribunal also accepted an interim application filed by Doha Bank requesting a stay on NCLT order also put a hold on the distribution of proceeds to the lender.
Doha Bank-led ECB syndicate had sought that RITL lenders be paid their due of ₹3,000 crore in full, and the only the balance amount should be paid to indirect lenders of Reliance Communications and Reliance Telecom Ltd (RTL).
The country’s largest lender State Bank of India (SBI) and IDFC Bank are the other members in the ECB syndicate.
On March 2, 2020, NCLT’s Mumbai bench had admitted indirect lenders ₹43,000-crore claims and classified them as financial creditors of the company based on a deed of hypothecation. This would have a direct impact on their voting percentage in the Committee of Creditors (CoC) of RITL and the ultimate distribution of amounts to them.
The ECB syndicate has also sought interim protection from NCLAT that during the pendency of the appeal, the distribution of amounts to indirect lenders should be put on hold.
Also Read: NCLT to hear SBI’s plea to withdraw Reliance Infratel’s fraud tag on July 5
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