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(ii) have agreed to issue a No Objection Certificate (NOC) to RIL, following which the Mukesh Ambani-promoted company will transfer the agreed amount to an escrow account. NOC is essentially no dues to RITL, a process to be followed before implementation of the resolution plan.
“Both sides have agreed to go ahead, which means progress has been made in fulfilling the proposal which has been hanging for almost two years now. Banks have already started issuing NOCs, which have been collected. and the resolution will be given to the professional, after which RIL will transfer the amount to the escrow account,” said a person aware of the transaction. RIL did not respond to an email seeking comment.
RITL, a subsidiary of Anil Ambani-controlled (RCom), has a total debt of ₹13,483 crore out of ₹41,055 crore dues accepted by the NCLT. About 30 lenders have direct or indirect exposure to the company, including guarantees given to parent company RCom.
The resolution plan approved by the NCLT in December 2020 envisages recovery of a total of ₹4,770 crore which includes advances of ₹3,720 crore paid directly by RIL. This includes a future payment of ₹800 crore to financial creditors on recovery from preference shares held in Reliance Realty (RRL) and ₹250 crore provided for settlement costs. The overall recovery for the lenders is at a haircut of 65%.
“It is expected that banks will give their NOC by the end of the month and the money should flow into the escrow account by the beginning of next month. RIL has assured the lenders that it will honor its commitment to release the amount as soon as the NOC is in place. are,” said a second person aware of the plan.
Bankers are worried about the delay as 178,000 route kilometers of fiber and close to 43,000 telecom towers are already being used by Reliance Jio, the telecom arm of RIL.
To be sure, banks would not receive the funds immediately, as Qatar’s Doha Bank, one of the banks that has direct funds-based exposure to the company, opposed the plan at the National Company Law Appellate Tribunal (NCLAT). Because it equates non-fund-based creditors to fund-based creditors. The NCLAT has put on hold the distribution of income till further orders. The next date of hearing in the NCLAT is August 26.
“The deal was stuck as RIL had sought certain clarifications including a report of the forensic audit of the company. These clarifications have been given, so the company is now ready to go ahead with the plan, although there may be some recalculation in this regard. Maintenance of assets in the last two years,” said a third person about the deal.
State Bank Of India,
and tagged RITL as a fraudulent account, which alerted RIL to take over the company. Banks have said that the fraud tag will not apply after the takeover by RIL. The forensic audit report was shared with RIL in March 2022.
After taking into account the cash in the company’s balance sheet as of June 2022, the company has an outstanding payment of Rs 226 crore. Banks have so far refused to make any deduction in the amount sanctioned by the NCLT in December 2020.