On Thursday, the Delhi High Court stayed the insolvency proceedings against Reliance Group chairman Anil Ambani after he filed a plea challenging the appointment of a resolution professional over a roughly 12 billion rupees ($163 million)personal guarantee that he had given to the State Bank of India for loans to his companies.
A Divison Bench of Justices Vipin Sanghi and Rajnish Bhatnagar passed the order in Anil Ambani's petition challenging the vires of the provisions pertaining to personal insolvency against personal guarantors under Part III IBC. Notice in the petition was issued to State Bank of India, Central Government and Insolvency & Bankruptcy Board of India.
On Saturday, the National Company Law Tribunal, Mumbai bench, initiated insolvency proceedings against Reliance Communications Chairman Anil Ambani to recover Rs 1,200 crore under the personal guarantee clause of the bankruptcy law.
While clarifying that the corporate insolvency resolution process against Anil Ambani's RCOM and RITL shall continue as before, the Court added that the extent of his liability as personal guarantor in the loans can be examined by the Resolution Professional in those proceedings.
As Reliance Communications (RCom) enters insolvency, the younger brother of India’s richest man has been barred him from disposing of any of his assets.
Anil Ambani, a little over a decade ago was one of the richest men in the world with a net worth of close to $42 billion. The total market value of his companies fell to less than a billion in the middle of last year. His company Reliance Communications filed for bankruptcy in 2019.
In February, Ambani claimed that he was bankrupt when the court ordered Ambani to pay USD 100 million towards a conditional order granted to three Chinese banks.
“Whereas Mr Anil Ambani’s investments were worth more than $7 billion in 2012, they are now worth $89 million, and his net worth is zero once his liabilities are taken into account… Quite simply, he was a wealthy businessman, now he is not,” said his barrister Robert Howe. According to this legal team, his wealth shrunk after 2012, attributing the loss to India’s telecom sector where his Reliance Communication was once a player.
Anil Ambani, the brother of India’s richest businessman Mukesh Ambani, in a 2005 deal brokered by their mother, won control of the power, financial services and the newly built telecoms business of Reliance Industries after Dhirubhai Ambani’s death in 2002, while Mukesh Ambani retained the oil and petrochemicals business.
In 2019, when Anil Ambani almost went to jail after failing to pay ₹550 crore, Mukesh Ambani stepped in to save his younger brother Anil from going to jail by giving money to be paid to Swedish equipment major Ericsson.