RCom shares nosedive 20.5% as NCLT admits Ericsson's bankruptcy petition

17 May, 2018, 13:36 | Author: Regina Silva
  • Considering that NCLT did not agree to keep the insolvency plea in abeyance it also puts in question its deal with Reliance Jio

The National Company Law Tribunal (NCLT) yesterday admitted an insolvency petition filed by Swedish communications equipment major Ericsson against Anil Ambani-run RCom and two of its subsidiaries seeking to recover Rs 1,150 crore.

Earlier, Mint reported that the NCLT admitted a plea filed by Ericsson which has stalled RCom's plan to sell its assets to Reliance Jio Infocomm Ltd. RCom was seeking to reduce its $7 billion debt with this deal.

Ericsson has had 9,000 employees working on RCom and its subsidiaries and has not received RCom's unpaid dues despite many promises and re-negotiations on payment schedules.

On NSE, the RCom counter has clocked a volume of about 425 million shares so far in today's session. The company is set to report earning for the quarter ended March on May 19.

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Sistema Shyam Teleservices offloaded over 1.5 crore shares of the company, lowering its holding to 4.43 per cent. The company and two of its subsidiaries will decide on the next course of action after studying the detailed order, RCom said in an exchange filing.

RCom can appeal the verdict with a tribunal in New Delhi. Last year, courtroom battles were one of the main reasons its merger deal with Aircel and the tower sale to Brookfield did not go through. Recently implemented bankruptcy rules bar takeovers of stressed assets by entities related to the defaulting promoters.

However, Tuesday's order from the NCLT means that the asset sale would now be overseen by a court appointed administrator.

Weakness was also seen in other group stocks, with Reliance Naval and Engineering falling by 6.96 per cent, Reliance Nippon Life Asset Management 2.46 per cent, Reliance Power 0.45 per cent and Reliance Infrastructure 0.45 per cent on BSE. That empowered the central bank and local lenders to push companies into insolvency and accelerated their ability to recover bad loans.

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