3 days ago
Canara Bank Labels RCom Unit Wilful Defaulter; Shares Rise
Canara Bank has said that a Reliance Communications unit did not properly repay its loan.
It classified the unit as a “wilful defaulter,” meaning the bank believes the default was deliberate under applicable rules.
The former chairman and director of Reliance Communications Limited was also given the same classification.
Despite this news, RCom’s share price rose 5% to Re 0.89.
RCom and RTL are currently going through a formal insolvency process.
Their creditors have approved plans to resolve the companies’ financial problems.
Those plans still need approval from the National Company Law Tribunal.
RCom said the loan issue began before the insolvency process and is seeking legal advice on what to do next.
Canara Bank classified a Reliance Communications unit as a “wilful defaulter,” according to RCom.
The promoter of Reliance Communications Limited was also classified as a wilful defaulter in his former role as chairman and director.
RCom shares rose 5% and reached the upper circuit at Re 0.89 apiece.
Reliance Communications and RTL are undergoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.
Resolution plans approved by creditors for both companies are awaiting approval from the National Company Law Tribunal’s Mumbai Bench.
- Who
- Canara Bank, Reliance Communications Limited, RTL, and the former promoter of Reliance Communications Limited.
- What
- Canara Bank classified an RCom unit and the company’s former promoter as wilful defaulters.
- Where
- The insolvency plans are awaiting approval from the National Company Law Tribunal’s Mumbai Bench.
- When
- The report does not specify the date of Canara Bank’s letter; RCom shares rose 5% earlier in the day.
- Why
- The classification concerns a loan account that RCom said relates to the period before RTL’s corporate insolvency process.
Canara Bank’s Classification
RCom’s Response
Treatment of the loan and default
Canara Bank’s Classification
Canara Bank classified the RCom unit and the former promoter as wilful defaulters under applicable Reserve Bank of India guidelines.
RCom’s Response
RCom said the loan account predates RTL’s insolvency process and must be addressed through a resolution plan or liquidation under the Insolvency and Bankruptcy Code.
Next steps
Canara Bank’s Classification
The bank’s letter communicated the wilful-defaulter classification.
RCom’s Response
RCom said its resolution professional is in control, the promoter is no longer chairman or director, and the company is seeking legal advice.
Key facts
- Bank involved
- Canara Bank
- Classification
- The RCom unit and the former promoter were classified as wilful defaulters.
- Share price
- RCom shares reached Re 0.89 at the 5% circuit limit.
- Insolvency process
- RCom and RTL are undergoing corporate insolvency resolution under the Insolvency and Bankruptcy Code, 2016.
- Resolution plans
- Creditors have approved plans for RCom and RTL.
- Pending approval
- The plans are awaiting approval from the National Company Law Tribunal, Mumbai Bench.
- Company response
- RCom said it is seeking legal advice on the way forward.
Quotes
Reliance Communications
The company responding to the wilful-defaulter classification and related legal implications
“Furthermore, legal advice is being sought on the way forward with respect to this development.”
businesstoday.in
Sources
Related news
Lenders Challenge NCLT Approval of Subhash Chandra’s Insolvency Plan
NCLT Admits Central Bank Insolvency Plea Against Rama Agro
Reliance Rejects Chandra Allegations Amid Personal Insolvency Dispute
Banks Challenge Family-Linked Votes in Subhash Chandra Insolvency Plan
Reliance Denies Chandra's Media Allegations Amid Insolvency Dispute
IRDAI Fines Canara HSBC Life Rs 1 Crore Over Lapses
Canara Bank Plans ₹4,500 Crore AT-1 Bond Raise
PC Jeweller Shares Rise as Debt Repayments Near Completion
Subhash Chandra Insolvency Case Faces Huge Haircut and NCLT Freeze
