Mumbai: China Development Bank has become the first lender to file a case against debt-ridden Reliance Communications Ltd (RCom) under the Insolvency and Bankruptcy Code, said two people familiar with the matter.

The bank filed the case before the Mumbai bench of the National Company Law Tribunal (NCLT) on 24 November, and law firm Trilegal is advising the Chinese lender, the two said on condition of anonymity. The telecom company owes close to $2 billion in syndicated loans to China Development Bank.

China Development Bank joins RCom’s operational creditors—Ericsson India Ltd and Manipal Tech Ltd—which have already filed bankruptcy petitions against the telecom company. Another of its vendors, Tech Mahindra Ltd, too had filed a petition before withdrawing it citing settlement talks, The Economic Times reported on 2 November.

“The Company has not been served any notice of the application filed by China Development Bank with NCLT, as reported in the media," said RCom in a notice to stock exchanges. It said that China Development Bank was “actively participating" in the joint lenders forum that restructured RCom’s debt under the strategic debt restructuring (SDR) rules. SDR allows banks to convert part of their loans into equity and take management control of a debtor. RCom’s total debt stood at Rs44,345 crore as of 31 March.

“The Company continues to remain engaged with all Lenders including the China Development Bank and is confident and committed to a full resolution with the support of all the Lenders," RCom said in its statement.

Earlier this month, RCom had defaulted on the coupon payment on its 2020 dollar bonds, the first such default by an India company since the insolvency code was passed in May 2016.

A Trilegal spokesperson did not respond to calls and an email seeking comment. China Development Bank could not be reached for comment.

If China Development Bank’s petition gets admitted, domestic lenders will be forced to set up a committee of creditors, which will work with an insolvency resolution professional to come up with a revival plan.

“SDR will have to give way to the NCLT proceedings. Unless the company is able to come up with a settlement prior to admission, the insolvency proceedings will take their course," said Ramesh Vaidyanathan, founder and managing partner of law firm Advaya Legal.

In June, the lenders of RCom had invoked SDR after the company presented a restructuring plan that involved hiving off and merging its wireless business with Aircel Ltd and selling a majority stake in its tower unit to Brookfield Infrastructure. Under the plan, lenders gave the company a breather on its interest payments till December 2018.

However, the merger with Aircel fell through, and on 20 October, the company presented a fresh debt repayment plan to its creditors. Under the new plan, the company envisages raising Rs27,000 crore through sales of assets including spectrum, real estate and towers. It said that a further Rs7,000 crore will get reduced after lenders convert this into equity for a 51% stake. Lenders have not approved this plan yet, another person familiar with the matter said on condition of anonymity.

On Monday, shares of Reliance Communications (RCom) fell 1.11% to Rs13.35 while the benchmark Sensex rose 0.13% to end the day at 33,724.44 points.

Jayshree P. Upadhyay contributed to this story.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

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