Reliance Communications‘ Chairman, who was once a billionaire declared that his net worth was zero, after a UK court directed him to pay $100 million to three Chinese banks for the recovery of $700 million owed to them as a part of loan agreement.
Earlier, the UK court directed Anil Ambani to pay $100 million towards a conditional order granted to three Chinese banks pursuing the recovery of over $680 million owed to them as part of a loan agreement.
In what is in effect a deposit to be paid into court pending a full trial in the case, Judge David Waksman had set a six-week timeline for such a payment to be made as he concluded that he did not accept Ambani’s defence that his net worth was “nearly zero” or that his family would not step in to assist him when “push came to shove”.
“In my overall conclusion, Mr Ambani has not satisfied me that he can’t make any payment at all,” said Judge Waksman, as he expressed particular criticism of a “lack of candour” and “transparency” on the part of Ambani’s defence in reference to his financial means.
The Reliance Group indicated that it plans to appeal against the ruling, which will involve a process of seeking permission to appeal.
“Mr Ambani is reviewing the order of the UK Court and will take legal advice as to further remedies in appeal,” a spokesperson for Anil Ambani said.
“The order pertains to an alleged personal liability of Mr Ambani and will have no bearing on the operations of the Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited,” the spokesperson said.
The three banks – Industrial and Commercial Bank of China Ltd Mumbai Branch, on behalf of itself, China Development Bank and Exim Bank of China – welcomed the order and said they remain confident of their claim succeeding at trial.
“This is a straightforward debt claim to recover outstanding loans made to RCom (Reliance Communications) in good faith and secured by a binding personal guarantee given by Mr Ambani, which he has refused to honour,” a statement on behalf of the banks said.
“We remain very confident in our claim. We hope that Mr Ambani will comply with the court’s order and look forward to the swift resolution of the case at trial,” the statement said.
Another senior Reliance Group official added that based on the legal advice, the RCom chief intends to seek further remedies in appeal and is “confident” that he will have the opportunity to establish that the Chinese claim is “without any merit”.
Earlier, during a half-day hearing, the court was told that Reliance Group chairman Anil Ambani was a wealthy businessman and now he is not as a result of a “disastrous turn of events” in the telecom market in India.
The Chinese banks had sought summary judgment against Ambani over an alleged breach of a personal guarantee on a debt refinancing loan of around $925 million in February 2012.
Ambani, 60, denies providing authority for any such guarantee, resulting in the High Court action in the UK – the jurisdiction agreed to as part of the terms of the loan agreement.
At the hearing at the Commercial Division of the High Court of England and Wales in London to set the terms for the “conditional order” granted to three Chinese banks last year against the Reliance Communications (RCom) boss, his legal team sought to establish that his net worth was zero once his liabilities were taken into account.