Ericsson Teaches Anil Ambani – and India – a Lesson

Discussion in 'General Talk' started by swatkats, Mar 20, 2019.

  1. swatkats

    swatkats Keeping TE Alive!

    Anil Ambani’s not going to jail after all, and Ericsson AB got its money. The Swedish company’s lawyers should take a bow.

    While the future of the Indian tycoon’s shrinking empire remains shrouded in uncertainty, at least questions over his near-term living arrangements got answered on Monday. Ambani thanked his “respected” elder brother, Mukesh, and sister-in-law, Nita, after avoiding a three-month prison term. India’s richest man showed up just in time to help his younger sibling who has, in a little over a decade, lost 99 percent of his $31 billion net worth.

    The local unit of Ericsson had accepted a Rs 5.5 billion ($80 million) settlement to keep its petition for Reliance Communications Ltd.’s $7 billion bankruptcy in abeyance. The telecom equipment vendor subsequently won a contempt-of-court order to put Chairman Anil Ambani in jail if the long-delayed payment – which he personally guaranteed – wasn’t received by Tuesday.

    When a history of the early years of India’s 2016 bankruptcy code is written, Ericsson’s lawyers will deserve a glowing mention. For an unsecured creditor to walk away with a 48 percent recovery of its claim – while secured lenders wait patiently for RCom to sell its spectrum, redevelop its land assets and pay them something – shows that the Swedish firm played its cards well.

    It also shows the secured creditors, led by State Bank of India, in a rather poor light. They have been deluding themselves since June 2017, when they agreed to an out-of-court restructuring, including a plan to convert part of their debt into equity at almost 25 rupees a share. Luckily that plan went nowhere. RCom shares closed on Monday at 4 rupees.

    A revised restructuring later that year also saw little progress. RCom, having decided to exit its money-losing 2G and 3G mobile operations, planned to offload spectrum, fiber and media convergence nodes to Mukesh Ambani’s hyper-aggressive 4G service. RCom and Jio officially called off the deal on Monday, just as the younger Ambani got bailed out by his brother. With RCom now seeking an in-court bankruptcy resolution, banks are back to square one.

    To see just how badly they have bungled RCom, consider the stinging rebuke the lenders received from an appeals judge at India’s bankruptcy tribunal last week:

    “You (State Bank of India) have failed. JLF (Joint lenders’ forum) has failed. No sale (of assets) took place. You clapped with RCom and claimed that you would recover around Rs 37,000 crore ($5.4 billion) from sale to Jio ... You failed ...”

    Even now, the lenders have no real plan. Jio's entry has crashed prices of telecom services, and led to shutdowns and bankruptcies, including of RCom. Mukesh Ambani may still have appetite for assets controlled by his younger brother, but a bidding war is doubtful.

    Recent comments by the founder of India’s most successful telecom company, Bharti Airtel Ltd. Chairman Sunil Mittal, should worry the banks deeply. When reporters asked Mittal on the sidelines of the Mobile World Congress in Barcelona if he’d bid for RCom’s spectrum out of bankruptcy, he questioned the very premise of airwaves being sold by tribunal-appointed resolution professionals. The spectrum was a sovereign asset belonging to the Department of Telecommunications, Mittal said, according to an Economic Times report. He asked why the DoT didn’t take the spectrum back and pool it with its own auctions.

    As secured lenders cringe at that thought, Ericsson’s lawyers can bask in their success. First, they snagged a sweet deal by exploiting RCom’s initial reluctance to enter in-court bankruptcy. Then, they succeeded in getting a credible jail risk for Anil Ambani thrown into the mix to ensure the deal was honored. Finally, they got their client $80 million. Really nicely done.

    ssslayer, Futureized and mh09ad5578 like this.
  2. Lord Nemesis

    Lord Nemesis Overlord

    What lesson? Given the 1.25 Lac crore worth of unpaid loans of Mukesh Ambani, whose money did Ericsson get in the end, while those brothers laughed their way out after skimping out a significant chunk of the payment. As for SBI, they will also do a settlement that is a minute fraction of the money owned and then they will again be allowed borrow even more funds indiscriminately. A settlement should also mean that they are blacklisted from ever being able to borrow money.

    The audacity of these brothers and their confidence in their ability to get away with anything should be apparent from this
    #2 Lord Nemesis, Mar 20, 2019
    Last edited: Mar 20, 2019
    Emrebel, ankushv, Arv90 and 3 others like this.
  3. chiron

    chiron Well-Known Member

    This just makes me sad.
  4. fractal

    fractal Well-Known Member

    Allow banks with bad debts to fail. No taxpayer bailouts. Nationalized banks to be freed of political interference. Banks will automatically learn to be more careful in future
  5. abhi1984

    abhi1984 Well-Known Member

    It is more like Ericsson showed that Indians and courts don't mix. Everyone, including an Ambani, is afraid of going to court - some due to way long processing by courts, some due to the fact that court matters are public and might cast a light on their reputation.
  6. Lord Nemesis

    Lord Nemesis Overlord

    The money they give out as bad loans also belongs to the people. With nationalized banks like SBI, it belongs to people who become part of vote banks for politicians. So, the govt would rather screw even more tax payers to bail out these banks.
    mh09ad5578 likes this.
  7. rdst_1

    rdst_1 Well-Known Member

    They were lucky that the company didn't go into insolvency proceedings. Even now I think, there is a clause that they will have to return the money if the company becomes insolvent.
    Source -
    Crazy_Eddy likes this.
  8. blr_p

    blr_p Well-Known Member

    Can't do that as it creates a panic.
    Emrebel, ssslayer and abhi1984 like this.
  9. ssslayer

    ssslayer Well-Known Member

    Sir can you please tell me which bank will you trust.
    Based on which document?

    Or shall we start burying money in our yards once again ...
    Emrebel, ankushv and Futureized like this.
  10. fractal

    fractal Well-Known Member

    It is perfectly fine to have regulated banks for pensioners but then they should not be allowed to make risky loans like they do today. Since the bank is regulated to not take excessive risk it takes care of the trust issue.

    The point is Government bailout of banks is not to help small savings and pensioners but big business.
  11. pauldmps

    pauldmps Well-Known Member

    Don't worry for him. He's soon going to get 30,000 crores of Rafale money.
  12. pratikb

    pratikb Well-Known Member

    Which 30,000 Cr?
  13. OP

    swatkats Keeping TE Alive!

    What is even 2G scam? It never happened. CAG just made a mess out of nothing.

    Now this Rafale also...

    In India.. Nothing can be proved! In our hearts we all know they're damn Scams!
  14. pratikb

    pratikb Well-Known Member

    Rafael is manufactured scam by RaGa for his narrative and Supreme Court and CAG all have bunked his scam allegations.
    Can you show proofs?
    He himself could never produce.
    He produced some French tape that also turned out fake.
  15. pauldmps

    pauldmps Well-Known Member

    I would rather not derail this thread with Rafale discussion. If a new thread is opened, we'll discuss there.
  16. rdst_1

    rdst_1 Well-Known Member

    The same is true for 2g scam as well. That didn't stop the opposition from making the allegations and asking for votes on that issue.
    Everyone knows it is near impossible to convict powerful people in scams based on conjecture because the proofs are just not available in the public domain. That's true for every government whether Congress-led or BJP-led. The collusion is just too-hard to prove because the systems are exploited from the inside with no transparency or accountability.
    mh09ad5578 likes this.
  17. pratikb

    pratikb Well-Known Member

    are you aware of aircel maxis deal?
    2g scam was exposed by subramanyam swami and he wont touch the case unless he has concrete evidence.
    do read up about aircel maxis deal and role of bc.
  18. rdst_1

    rdst_1 Well-Known Member

    So, since he had concrete evidence, can you tell me who all politicians have been convicted by the court in connection with the 2g scam.
  19. pratikb

    pratikb Well-Known Member

    we all know court connections of congress and how it manipulates even supreme court.
    just to give you latest example.
    can you tell me how many times karthi and senior chidambaram has got bail?
    i know you wont read so here is link for you

    can you tell me how national herald scam is running?

    entire gandhi clan is out on bail.

    dont worry.
    #19 pratikb, Mar 26, 2019
    Last edited: Mar 26, 2019

Share This Page