Shares of billionaire Anil Ambani’s Reliance Communications tanked 15.26% at the BSE on Wednesday, a day after the National Company Law Tribunal’s (NCLT) Mumbai Bench admitted three petitions by Ericsson India Private Ltd to begin bankruptcy proceedings against what was once India’s second-largest telecom operator.

The NCLT’s decision puts at risk the Rs 18,000 crore deal between Reliance Communications and Mukesh Ambani’s Reliance Jio. Reliance Jio had agreed to buy spectrum, towers, fibre and switching nodes in a definitive agreement in December 2017. Under the Insolvency and Bankruptcy Code (IBC), once the NCLT orders bankruptcy proceedings to begin, the company cannot conduct any business, litigation or sell any assets.

Swedish telecom equipment maker Ericsson had filed the petitions seeking to recover Rs 1,150 crore dues. The NCLT has also ordered Ericsson to suggest the name of an interim resolution professional (IRP). The IRP would have 270 days to find new buyers for Reliance Communication, or the company will head into liquidation.

“Reliance Communications Limited and two of its subsidiaries, Reliance Telecom Limited and Reliance Infratel Limited, await the detailed orders of the Hon’ble National CompanyLaw Tribunal (NCLT), Mumbai, allowing the Ericsson application for admitting the companies to debt resolution under IBC,” a spokesperson for Reliance Communications said.

An official of Reliance Communications said on condition of anonymity that the company would challenge the order at the National Company Law Appellate Tribunal (NCLAT).

“There is a bone of contention with respect to our assessment and that of Ericsson on the quantum of R-Com’s dues to them. That matter is the subject of arbitration and we are awaiting for the verdict,” the official said.

He added, “We will most likely move the NCLAT challenging the admission of the case filed by Ericsson under IBC, since a deal has been finalised with Reliance Jio to sell assets and repay lenders in full. The deal that had been struck with Jio would see lenders getting paid in full, whereas there is a possibility of lenders having to take a haircut if the process is routed through the IBC with the help of a resolution professional.”

Lawyers Fortune India spoke to said on condition of anonymity that the matter may ultimately be decided by the Supreme Court. “Reliance Communications in all probability will go all the way up to the Supreme Court to avoid going into bankruptcy. If their appeals are unsuccessful, it would put the deal with Reliance Jio under a cloud as Section 29A might be applicable,” a Delhi-based lawyer.

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