New Delhi/ Hong Kong/ Mumbai: Once worth at least $55 billion, India's Anil Ambani has about a day to piece together $80 million to settle long-pending dues with a vendor or go to prison.
The tycoon's heavily indebted telecom business had promised to pay the local unit of Ericsson AB about 5.5 billion rupees ($80 million) for past maintenance services. The repeated failure to comply and Ambani's personal guarantee landed him in trouble last month, with the nation's top court holding him in contempt. His companies suffered a setback last week after a lower court refused to free up tax refunds withheld by lenders.
In court arguments, the lawyer representing Ambani's telecom carrier Reliance Communications Ltd., or RCom, said the group firms have no money to settle, unless lenders released 2.6 billion rupees of tax refunds — a proposal opposed by the banks. The National Company Law Appellate Tribunal, in a ruling March 15, said it can't direct banks to release the amount.
The war on bad debt also allowed Ericsson's local unit to leverage the nation's new bankruptcy law to arm twist RCom on claimed dues of 16 billion rupees. The Swedish telecom equipment vendor started off with a bankruptcy petition and then played hardball to the point it extracted a personal guarantee from Ambani. That's what eventually landed him a jail threat.
Elder brother should write out a check. An Ambani going to debtor's prison is not a good outcome for the family.