News By/Courtesy: Riddhima Kedia | 25 May 2020 13:16pm IST

HIGHLIGHTS

  • A liability of $717 Million on Anil Ambani's Shoulder, Justice Nigel Teare ruled that a personal guarantee disputed by Ambani is binding on him
  • The UK Court asks Ambani to pay back his liability within 21 days
  • Anil Ambani says his net worth is zero, can’t pay Chinese banks back

In February 2012, a corporate loan was availed by Reliance Communications Limited (RCom) for global refinancing. The loan was taken from three Chinese banks marking the liability of $717 million, to which the former billionaire Anil Ambani provided a personal guarantee. The company now in insolvency proceedings defaulted on the loan however, the banks have sued the recovery with interest.
On Friday, the UK Court order pertained to a reported personal liability of $717 million on the Reliance Group chairman Anil Ambani. He is ordered to pay back the three Chinese bank (Industrial and Commercial Bank of China Ltd Mumbai Branch, China Development Bank and Exim Bank of China) within 21 days, the banks have been pursuing recovery of funds owed to them as part of a loan agreement made in 2012.  
In the Commercial Division of the High Court of England and Wales in London, Justice Nigel Teare ruled that a personal guarantee disputed by Ambani is binding on him.
Justice Teare’s order reads: “It is declared that the Guarantee is binding on the Defendant (Ambani). The sum payable by the Defendant to the Claimant (banks) according to the Guarantee is $716,917,681.51. It is declared that pursuant to clause 3.2 of the guarantee, the defendant is liable in respect of any payment made by RCom to the lenders towards repayment of the loan which is repaid, reversed or refunded as a result of the RCom insolvency action."
Ambani’s spokesperson said, “It is emphasized that it is not a personal loan of Ambani. ICBC (Industrial and Commercial Bank of China) made their claim based on an alleged guarantee that was never signed by Ambani and he has consistently denied having authorized anyone to execute any guarantee on his behalf. As far as the judgment of the UK court is concerned, the question of any enforcement in India does not arise in the near future, and Ambani is seeking legal advice on the future course of action”.
His spokesperson further said, “The order of the UK court will have no bearing on the operations of Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited”.
The banks had taken their claim for summary judgment and in February were granted a conditional order, in effect a deposit to be paid into court pending a full trial in the case.
On February 7, Over a hearing Judge David Waksman had set a timeline of six-week for the payment of $100 million pending a full trial in 2021.
According to the court order, nearly $717 million has to be paid by Ambani that aggregately comprises of the principal amount outstanding under the Facility Agreement of $549,804,650.16; interest outstanding as of May 22 of $51,923,451.49; and default interest due of $115,189,579.86.
The court order clearly states that the final amount owed by the Defendant [Ambani] to the Claimant [banks] under the Guarantee shall be assessed subject to the outcome of the RCom Insolvency Action, leaving the option open to the banks to revisit the final amount in future.
The reference is to an ongoing State Bank of India (SBI) Insolvency Application in the National Company Law Tribunal (NCLT) in India related to Reliance Communications (RCom), which the Chinese banks’ legal team had argued had no bearing on the English Court’s ability to proceed to determine their clients’ claims.
Ambani denied to provide authority for any guarantee, thereby the UK jurisdiction agreed upon as part of the terms of the loan agreement.
At the last hearing, Justice Waksman had ruled that he did not accept Ambani’s defense that his net worth was nearly zero or that his family would not step in to assist him when push came to shove to cover the conditional order amount of USD 100 million.

Section Editor: Pushpit Singh | 25 May 2020 17:49pm IST


Tags : .

Latest News







Copyright Kalyan Krishna MediaZ Private Limited. All rights reserved. Unless otherwise indicated, all materials on these pages are copyrighted by Kalyan Krishna MediaZ Private Limited. All rights reserved. No part of these pages, either text or image may be used for any purpose. By continuing past this page, you agree to our Terms of Service, Cookie Policy, Privacy Policy and Content Policies.