Chairman of Reliance Communications, Anil Ambani, is being sued by three Chinese banks for defaulting on a loan of $680 million.
The Industrial & Commercial Bank of China Ltd, China Development Bank and the Export-Import Bank of China were the three banks that agreed to a loan of $925.2 million to Reliance Communications Ltd, Ambani’s firm in 2012.
According to the ICBC’s lawyer Bankim Thanki, the loan was provided on the condition that Ambani provides a personal guarantee, reported Economic Times.
While some payments were made by the company, it defaulted in February 2017.
Anil Ambani said he agreed to give a non-binding personal comfort letter but never gave a guarantee tied to his personal assets.
ICBC “failed and continues to fail, to distinguish between Mr. Ambani on the one hand, and the company to whom the loans were being extended...on the other.”Robert Howe, Anil Ambani’s Lawyer
In Detail
In the winter of 2011, Anil Ambani went to Beijing to negotiate a loan with ICBC’s former Chairman Jiang Jianqing directly, according to a court filing, reported Economic Times.
While the lenders sought a share pledge before granting the loan, the legal dispute now centres around whether Ambani or one of his associates went on to provide a personal guarantee as security.
According to Thanki, seven years ago when the loan was set up, Hasit Shukla, Reliance’s commercial and treasury head, signed a personal guarantee on Ambani’s behlaf by power of attorney.
Countering this point, Ambani’s lawyer claims that he did not give Shukla the permission or authority to sign for him, thus making the guarantee non-binding.
“Mr Ambani’s position is that the claim made by ICBC in relation to his alleged personal guarantee for loans to RCOM is without merit.”Spokesperson of Anil Ambani
The banks said in a statement that this is a straightforward debt claim that is being made to recover outstanding loans made to RCOM (Reliance Communications) in good faith, and secured by a personal guarantee given by Anil Ambani, reported Economic Times.
In a court ruling on Thursday, 7 November, the lawyers of ICBC have asked the judge for either an early ruling or a conditional order that would ensure Ambani pay the unpaid sum and interest to the court under the facility agreement.
(With Inputs from Economic Times )
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