The Supreme Court (SC) on Friday gave permission to Anil Ambani‘s Reliance Communications (RCom) to sell assets worth over ₹18,000 crores to Reliance Jio, which is owned by his brother Mukesh Ambani.
The transaction will enable RCom to settle its debts with its lenders, which have been due since June last year because of the company’s worsening financial state. However, the settlement terms between RCom and the lenders was objected to by Swedish company Ericsson, which is also due to receive payment for equipment it had supplied to the company before.
Subsequently, Ericsson had moved to the National Company Law Tribunal (NCLT), Mumbai earlier this year in May, seeking payment of its dues. The NCLT had then initiated insolvency proceedings against the company, and directed RCom to pay ₹550 crore to Ericsson by the end of September 2018. RCom them moved to the National Company Law Appellate Tribunal (NCLAT), which stayed the insolvency clause, but also directed the company to pay the dues to Ericsson.
In the order issued by the SC on Friday, it said that “the timeline of September 30 shall be strictly adhered to and payment of Rs ₹550 crore be made on or before September 30, 2018,” and added that “the sale of the assets concerned will go through as has been stated in the orders of Tribunal and the Appellate Tribunal.”
The SC has also instructed chairman Anil Ambani to sign an undertaking stating that RCom will pay its dues to Ericsson by 30 September 2018 within a week of when the order has been announced. In case the company does not close the deal with Reliance Jio by 27 August, the company is at risk of bing forced into insolvency again.
RCom has repeatedly defaulted on its loan payments for over a year and had entered the Strategic Debt Restructuring scheme in June last year to repay its debts.
The court will next take up the matter on 1 October 2018.