NCLT Mumbai has ordered the initiation of Insolvency Resolution Process against Reliance Communications Infrastructure Ltd. (RCIL) under section 7 read with rule 4 of the Insolvency and Bankruptcy Code, 2016.
According to the plea of State Bank of India (SBI) the company had made a default of Rs. 3730.40 crore. The company RCIL was the guarantor of the loans provided by SBI to Reliance Communications (RCOM), Reliance Telecom (RTL), Reliance Infratel (RITL).
SBI has further said that in 2015 it had advanced Rupee Term Loan of Rs. 1500 crore to RCOM and of Rs. 125 crore to RTL. After the advancements, made both the companies owed to SBI Rs. 6,015 crore and Rs. 735 crore respectively. Further, in 2016, SBI advanced a loan of Rs. 565 crore and Rs. 635 crore to RCOM and RITL respectively.
Now in January 2017, RCIL along with RCOM and RTL executed a Corporate Guarantee Deed of Rs. 1200 crore in favor of Axis Trustee Services Ltd (ATSL). RCIL along with RITL and RTL executed the same Corporate Guarantee Deed of Rs. 1200 crore in favor of ATSL. RCIL along with RCOM and RITL executed the Corporate Guarantee Deed of Rs. 6750 crore in favor of ATSL.Under the Corporate Guarantee Deed, the guarantors were unconditionally liable if any or all of them failed to discharge their liabilities as required by the trustee services.
In February 2019 Axis Trustee Services invoked the guarantee that was issued by SBI. Under this guarantee Rs. 7229.45 crore and Rs. 81032.47 crore was demanded from RCIL with respect to the liability of the outstanding amount by RCOM and RTL respectively.
In April 2019 SBI recalled for payment of Rs. 8460.91 crore from RCOM and Rs. 1428.05 crore from RITL.
Owing to these circumstances NCLT Mumbai has ordered for initiation of Insolvency proceedings against the company i.e. Reliance Communications Infrastructure. Anish Niranjan Nanavaty has been appointed as the interim resolution professional for the case by the court. The court has also put a stay on the entire suit either ongoing/pending against RCIL. The company is also prohibited from any transfer, recovery or disposing of any asset of the company.