Shares in debt-laden Reliance Communications (RCom) fell close to 50% on Monday as the Anil Ambani-owned company announced that it would seek bankruptcy protection from India’s insolvency tribunal.

At 0345 UTC, the company’s stock fell to an intraday low of 6.01 rupees a piece in Bombay Stock Exchange trading, bringing its annual downside rate to 19%. The stock chart formed three large red candlesticks consecutively, in which more than 120 million RCom shares exchanged hands in just one hour.

Anil Ambani Reaches Bankruptcy Court

RCom said Friday that it would shift its debt resolution plan to National Company Law Tribunal (NCLT). The company also confirmed that its lenders had not earned proceeds from their asset monetization strategies and – to this date – its debt resolution process did not yield expected results due to several legal hurdles and disagreement among its forty creditors, to whom it owed $7 billion in 2017. Therefore, it was necessary for RCom to seek a fast track court resolution.

“The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time-bound manner within the prescribed 270 days,” the company said.

Reliance Jio Bids for RCom Assets

The move means that the company will sell 122.4 MHz of spectrum and 43,000 telecom towers at a cheaper rate to Reliance Jio, an Indian telecom company headed by Anil Ambani’s elder brother Mukesh Ambani. The company also eyes selling its 1.78-lakh route km of optical fiber cable network and 248 media convergence nodes to Jio for Rs 5,000 crores (~$701.5 million) despite facing roadblocks from Department of Telecommunication (DoT).

Reliance Communications owes DoT Rs 2,950 crores (~ $411.3 million) in pending spectrum dues. The company now needs to receive a guarantee from banks against these dues before it sells its assets to Jio. RCom would need to present a resolution plan that mainly propagates huge haircuts for lenders, per the new insolvency and bankruptcy code (IBC). Failing to do so would mean that Reliance Communications goes into liquidation. It could lower the value of the company’s assets as it would take years to liquidate all the property.

IBC could ensure RCom open bidding by fetching best asset price for lenders. With Reliance Jio being the only interested acquirer, the company’s NCLT move could allow the Mukesh Ambani company a swift take-over as it eyes large-scale wireless, fiber-to-home and enterprise services across India.