Lawstreet Journal

NCLT Orders Appointment of a Resolution Professional to Examine SBI's Insolvency Application Against Anil Ambani [READ ORDER]

Lawstreet Journal 22 Aug 2020 12:03am

Image courtesy: Lawstreet Journal Business NCLT Orders Appointment of a Resolution Professional to Examine SBI's Insolvency Application Against Anil Ambani [READ ORDER]

The National Company Law Tribunal (NCLT) Mumbai on Friday (August 21,2020) gave assent to initiate bankruptcy proceedings against Anil Ambani, the chairman of Reliance Communication (RCom), over his failure to repay debt. In 2016, State Bank of India (SBI) had given credit facilities to RCom and Reliance Telecom Infrastructure Ltd (RTIL), companies under the Reliance ADAG group headed by Anil Ambani. 

NCLT observed that "Both RCOM and RITL committed default in repayment in and around January 2017. The accounts were retrospectively declared as Non-Performing Account (NPA) with effect from 26.08.2016 i.e. even before loan agreements had been entered into."

In August 2016, loans worth Rs 565 crore and Rs 635 crore were given to Reliance Communications and RTIL respectively by SBI. Ambani, in September 2016, offered about Rs 1,200 crore of personal guarantees for availing the credit facility. Later in 2017, accounts of RCom and RITL were held to be in default, retrospectively, since August 2016. Subsequently, SBI invoked the personal guarantee issued by Anil Ambani in January 2018. A demand notice was issued to Anil Ambani by the lenders seeking recovery of dues, however, no response was received.

The NCLT has ordered the appointment of a Resolution Professional (RP) to examine SBI's insolvency application against Ambani. Nonetheless, the tribunal has also asked SBI to proceed with the necessary steps, maintaining that it is wrong to assume that no action can be taken until a resolution plan is accepted. "Sec 60(2) clearly provides for proceedings to be launched against personal guarantors, running parallel… Continue Reading...

Tagged: National Company Law Tribunal   NCLT  
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