The Reliance Communications Ltd. and Ericsson AB saga has gone through many twists and turns–an insolvency application followed by a conditional stay, settlement offer, desperate attempts to sell assets, reneging on the settlement agreement, contempt of court, potential jail term and payment.
Act I. Act II is getting started and three issues will likely determine the plot:
Ericsson needs the Supreme Court’s approval to withdraw its original insolvency application. It has gone to the apex court to do so but RCom is arguing against it.
If the Supreme Court allows insolvency proceedings to continue, Ericsson may have to return Rs 550 crore to RCom because the payment may qualify as a preferential transaction.
The date of commencement of insolvency against RCom will determine if the Rs 550 crore payment can be covered under Insolvency and Bankruptcy Code’s preferential transaction provisions.
The final twist that will determine Ericsson’s tale is what’s allowed to be the date of commencement of RCom’s insolvency proceedings.
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