Chinese Banks Catch a Break in Legal Tussle With Son of India’s Richest Family
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Antilia, a residence of Reliance Industries Ltd.'s chairman and managing director Mukesh Ambani, in Mumbai, India, on Jan. 26, 2021. Photo: Bloomberg
A handful of Chinese banks have spent the better part of a decade tangling in courts in two countries in an effort to recover more than $700 million owed by a bankrupt telecom company run by a member of India’s richest family. A decision by India’s highest court last month finally gives them a shot at getting some of their money back.
In 2012, Reliance Communications Ltd., which at one point was India’s second-largest mobile phone carrier, secured a $925 million loan from the China Development Bank (CDB), the Export-Import Bank of China (Exim Bank), and Industrial and Commercial Bank of China Ltd. (ICBC), now the world’s largest commercial bank by assets.
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- Chinese banks, including China Development Bank, Export-Import Bank of China, and ICBC, battled for over $700 million owed by India's bankrupt Reliance Communications, part of Anil Ambani's conglomerate.
- The Supreme Court of India recently recognized the Chinese banks as "financial creditors," allowing them a chance to recover funds from Reliance Communications.
- In 2012, the company secured a $925 million loan, but faced financial difficulties, missing payments and defaulting on dollar bonds by late 2017.
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Who’s Who
- China Development Bank
- China Development Bank (CDB) is one of the Chinese banks pursuing $700 million owed by the bankrupt Reliance Communications. In 2012, CDB provided part of a $925 million loan to the company. The Supreme Court of India recently recognized CDB and two other Chinese banks as financial creditors in the bankruptcy case, allowing them more influence in insolvency proceedings and a chance to recover some of the outstanding debt.
- Export-Import Bank of China
- The Export-Import Bank of China is one of the banks involved in a $925 million loan to Reliance Communications Ltd., which defaulted. The Chinese bank, along with two others, pursued the recovery of over $700 million through legal proceedings in India. They were initially denied creditor status but were later recognized as financial creditors by India's Supreme Court, potentially allowing them to recover some of the owed money.
- Industrial and Commercial Bank of China
- The Industrial and Commercial Bank of China (ICBC) is mentioned as one of the lenders to Reliance Communications, providing part of a $925 million loan. ICBC is recognized as the world's largest commercial bank by assets. Alongside China Development Bank and the Export-Import Bank of China, it pursued legal action to recover debts from the bankrupt telecom firm run by Anil Ambani, brother of Asia’s richest man, Mukesh Ambani.
- Reliance Communications
- Reliance Communications, once India's second-largest mobile carrier, was controlled by Anil Ambani, younger brother of Asia’s richest man, Mukesh Ambani. It secured a $925 million loan from Chinese banks in 2012. Facing financial trouble, it defaulted on payments in 2017 and filed for bankruptcy in 2019. A long legal battle ensued regarding recognizing Chinese banks as financial creditors, culminating in a Supreme Court decision favoring the banks.
- Shanghai Electric Power Co.
- Shanghai Electric Power Co. Ltd. was involved in a deal financed by Chinese banks in October 2010, where they provided about $1 billion for one of Anil Ambani's conglomerate subsidiaries to purchase equipment, marking one of the largest commercial contracts between China and India at the time.
- Doha Bank
- Doha Bank Q.P.S.C. is a Qatari bank that is also owed money by Reliance Communications. It challenged the designation of three Chinese banks as financial creditors in the bankruptcy proceedings, arguing their ineligibility based on the Deeds of Hypothecation. Initially, the National Company Law Appellate Tribunal agreed with Doha Bank and revoked the financial creditor status of the Chinese banks, but this decision was later overturned by the Supreme Court of India.
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What Happened When
- October 2010：
- Chinese banks financed about $1 billion for a deal for one of Reliance's subsidiaries to purchase equipment from Shanghai Electric Power Co. Ltd.
- 2012：
- Reliance Communications Ltd. secured a $925 million loan from the China Development Bank, Export-Import Bank of China, and Industrial and Commercial Bank of China Ltd.
- February 2017：
- Reliance Communications started missing payments on the $925 million loan.
- November 2017：
- Reliance Communications defaulted on its dollar bonds.
- November 2017：
- China Development Bank filed a petition with India's National Company Law Tribunal to recover the money owed by Reliance Communications.
- 2019：
- Reliance Communications filed for bankruptcy, and three Chinese banks took the company to a U.K. court to recover $717 million.
- March 2020：
- Reliance Communications submitted a resolution plan to sell company assets and repay 70% of outstanding 330 billion rupees ($4.5 billion) owed to creditors.
- Late 2020：
- The tribunal recognized the three Chinese banks as financial creditors.
- 2022：
- The financial creditor status for the three Chinese banks was revoked following a challenge by Doha Bank Q.P.S.C.
- By December 20, 2024：
- The Supreme Court of India recognized the three Chinese banks as financial creditors.
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