Ericsson India files insolvency case against RCom

15 Sep 2017
00:00
News
Daily News

Ericsson India has thrown a potential spanner into the works of the proposed merger between Reliance Communications (RCom) and Aircel, filing bankruptcy proceedings against debt-burdened RCom and two of its subsidiaries.

Ericsson has petitioned the National Company Law Tribunal (NCLT) seeking the commencement of bankruptcy proceedings over unpaid dues of 11.5 billion rupees ($179.3 million), the Economic Times reported.

If the petition is accepted it could disrupt the RCom-Aircel merger at a crucial time for the process. RCom needs to complete the merger as well as the sale of its tower assets by December to meet its creditors' deadline. After this time the banks will resume collecting interest on its debt.

The NCLT is due to hear the case on September 26.

According to the report, RCom does not dispute the size of the debt, and RCom and Ericsson are in talks over a potential settlement outside of the courts, which could include arranging instalment payments or pardoning the interest on the debt.

If Ericsson is successful in its court action, it could also prompt more creditors to take the legal route, which would be bad news for RCom.

Meanwhile several of RCom's creditors have objected to a petition seeking approval of the merger with the NCLT. The tribunal is set to hear the case next month following negotiations between RCom and its main lenders.

Related content