RCOM rejects Supreme Court allegations

Bankrupt telco Reliance Communications (RCOM) has responded to allegations from the Supreme Court that its insolvency proceedings were intended to avoid paying dues related to the reclassification of Adjusted Gross Revenue (AGR) in October last year. The Economic Times quotes an affidavit from the company rebutting the accusations, stating that its insolvency ‘commenced even before the hearings in the AGR proceedings commenced, let alone the pronouncement of the AGR judgement, and was not triggered as a consequence of said judgement’. RCOM explained to the apex court that its insolvency followed a legal battle with vendor partner Ericsson over unpaid dues in 2018, and it was declared bankrupt in May 2019. Further, regarding the Department of Telecommunications’ (DoT’s) demand for AGR-related dues of around INR252 billion (USD3.37 billion), the company noted that the DoT would be treated as an operational creditor, and its claims were dependent on the resolution of the insolvency process. RCOM also rejected the government’s claims that it is responsible for AGR-related dues totalling around INR2.21 billion of Sistema Shyam Teleservices Limited (SSTL), which was merged with RCOM in 2017. The telco said it was not liable for the fee, pointing out that SSTL continues to exist as a separate legal entity ‘as only its telecom business was merged with RCOM’.