India's Reliance Communications' unit GCX files for bankruptcy

A unit of Reliance Communications Ltd., Anil Ambani's distressed telecom firm, has filed for bankruptcy protection.

GCX Ltd., which owns the world's largest private undersea cable system, is the latest company owned by the tycoon to stumble. The former billionaire's Reliance Communications itself fell back into bankruptcy earlier this year. The move by subsidiary GCX comes after it missed payment on its $350 million (Dh1.2 million) of 7  per cent bonds that matured on Aug. 1.

Ambani has been waging a war on debt, and Reliance Group has said that it planned to raise about 217 billion rupees ($3.1 billion) by selling assets from roads to radio stations in a bid to cut borrowings.  

India has been grappling with the world's worst bad-loan mess, and a deepening shadow-banking crisis and hurdles in bankruptcy rules are set to prolong that struggle.

Reliance Naval & Engineering Ltd., another firm controlled by Ambani, said recently it is facing an acute cash-flow crunch after orders dried up amid efforts to restructure a pile of debt.

GCX said in July that it had reached a forbearance pact with holders that provided additional time to discuss options related to the maturity of its bonds. Moody's Investors Service cut its rating on the firm to Ca last month, as it considered the missed payment on the $350 million bonds a default.

GCX along with other associates filed for Chapter 11 bankruptcy protection at the Delaware court, according to a court filing.