Chinese banks and other lenders to Reliance Infratel (RITL) have written to the Finance Minister Nirmala Sitharaman and Chairperson of the Insolvency and Bankruptcy Board of India (IBBI) Navrang Saini seeking their intervention in implementation implementing the resolution plan of Reliance Projects & Property Management Services (RPPMSL) RPPMSL, an affiliate of Reliance Jio.
The financial creditors of RITL – China Development Bank, Export Import Bank of China, Subh Holdings Pte and SC Lowy Asset Management – hold an aggregate financial debt of ₹13,483 crore of the total financial debt of ₹41,055 crore. RPPMSL had won the mandate to buy RTIL’s assets for ₹4,400 crore in December 2020.
“We wish to bring to your attention a deeply concerning roadblock in the implementation of the resolution plan for RITL by the successful resolution applicant – Reliance Projects & Property Management Services (RPPMSL), a group company of Reliance Jio Infocomm,” the letter signed by Jiang Jingli, Vice-Governor of China Development Bank, said.
The letter further seeks instituting appropriate legislative amendments to the Insolvency and Bankruptcy Code (IBC) providing for penalties on defaulting or non-compliant successful resolution applicants. The plea is made in order to disincentivise successful resolution applicants from withholding or delaying the implementation of NCLT-approved resolution plans or withdrawing or modifying resolution plans once submitted as part of a corporate insolvency resolution process (CIRP).
In late 2019, RPPMSL submitted a resolution plan that included payment of ₹3,720 crore towards CIRP costs and payment to stakeholders. This was duly approved by the NCLT and by the RITL Committee of Creditors (CoC) led by the State Bank of India. The following year, Indian banks – SBI, United Bank of India and Indian Overseas Bank – tagged RITL as a fraud account following a forensic audit.
“We understand that the RITL fraud classification was not uploaded on the Central Repository of Information on Large Credit website for 45 days until December 21, 2020, by which date the RPPMSL Resolution Plan has already been approved by the NCLT,” the letter further added.
RPPMSL has refused to go ahead with the resolution plan in the absence of the forensic audit copy demanded by it. Last year SBI is understood to have submitted to the NCLT that it will withdraw the fraud tag against RITL once the RPPMSL resolution plan has been implemented.
The move to write a letter to the FM and IBBI head follows a ‘no developments or substantive hearings’ on this matter post June 2021, as alleged by the Chinese banks, even as the CoC continues to incur losses.
“As a policy, bank does not comment upon matters relating to individual account and its conduct,” said a SBI spokesperson. Reliance Jio did not respond at the time of publishing this article
“RPPMSL enjoys the complete use of the towers of RITL at a significantly discounted price. Given this usage, the RITL CoC continues to incur losses for the maintenance of these towers at ₹30-40 crore per month,” the letter further added.
Published on
March 14, 2022
