India's Reliance Communications is facing more troubles related to its large debt burden, with reports that one of its largest creditors has filed an insolvency petition against the operator.
Multiple reports indicate that the China Development Bank (CDB) has filed an insolvency petition with the National Company Law Tribunal.
RCom has already had insolvency cases filed against it by two creditors including Ericsson, but the CDB petition would be the first from one of its banking creditors.
Legal action from the CDB would be a significant blow because RCom owes an estimated 114.6 billion rupees ($1.78 billion) to the bank, which accounts for roughly 37% of the operator's 450 billion rupee total debts.
An insolvency suit would eliminate the prospect of reaching an out of court settlement between RCom and its creditors.
It would also negate the debt restructuring plan RCom has proposed to its lenders, which involves settling most of its debts through asset monetization and a debt to equity conversion while carrying the remainder forward.
But RCom has denied receiving any notice from CDB and insisted that the bank is an active participant in the negotiations it is holding with the joint lenders forum representing all its creditors.
To save costs and deal with its debt problems, RCom recently elected to switch off its 2G voice services in eight circles and is reportedly considering selling spectrum and equipment assets to rival Bharti Airtel.