RCom’s lenders will ask Ericsson to pay back ₹580 crore, says report

• Reliance Communications has sent a notice to Ericsson asking the company to return ₹580 crores that the former had paid.
• In May 2019, Reliance Communications had moved to the National Company Law Tribunal to file bankruptcy.
• Anil Ambani’s brother Mukesh Ambani had bailed him out by paying Ericsson the amount in March.

Bankrupt Reliance Communications’ lenders might be sending a notice to Ericsson asking it to pay back ₹580 crores, which it had paid under Supreme Court’s order.

According to sources, the payment made to Ericsson comes under ‘preferential transaction’ under the Insolvency and Bankruptcy Code. And, that Ericsson is liable to pay it back.

A preferential transaction is where one creditor receives payments ahead of others. During bankruptcy proceedings, the process assigns a rank to each creditor and decides how much and when it would pay each of them. These creditors include banks and other lenders, in addition to vendors and others that RCom has to pay back.

If Ericsson does to agree to pay it back, the lenders might also taking the legal route to force it.

In May 2019, Reliance Communications had moved to the National Company Law Tribunal to file for bankruptcy. It had saddled a total debt of ₹46,000 crore, and had been trying to sell assets to pay off some of it.

In February, the Supreme Court directed Anil Ambani-owned Reliance Communications to pay Ericsson the dues it owed. It had also said that Ambani would go to jail unless the company clears its dues. At this juncture, Anil’s elder brother and billionaire Mukesh Ambani had bailed him out, just in the nick of time.