Reliance Group chairperson Anil Ambani on Friday pleaded poverty to a court in United Kingdom in his dispute with three Chinese banks seeking $680 million (approximately Rs 48,630 crore) in defaulted loans, PTI reported. Ambani, who was once a billionaire, told the court that his “net worth is zero” and that he is bankrupt.
The case pertains to a lawsuit filed by three Chinese banks over an alleged breach of a personal guarantee on a debt refinancing loan of around $925 million (approximately Rs 66,152 crore) to Ambani’s Reliance Communications in in February 2012 with the condition that he personally guarantee the loan. However, Ambani denied this and claimed he never gave a guarantee tied to his personal assets. Reliance Communications filed for bankruptcy last year.
“The value of Ambani’s investments has collapsed since 2012,” his lawyer Robert Howe told the court. “The Indian telecom sector in particular has been dramatically hit by the Indian government’s change of policy in relation to the grant of spectrum. Whereas Mr Ambani’s investments were worth more than $7 billion in 2012, they are now worth $89 million, and his net worth is zero once his liabilities are taken into account...Quite simply, he was a wealthy businessman, now he is not.”
Ambani also stated that he does not hold any meaningful assets which can be liquidated for the purposes of these proceedings, according to CNBC-TV18.
Howe argued that Ambani cannot come close to paying a sum of $700 million.
However, the banks’ counsel questioned Ambani’s claims and repeatedly referred to his “lavish lifestyle”, involving access to 11 or so luxury cars, a private jet, a yacht and rent-free access to the exclusive penthouse in South Mumbai. Barrister Bankim Thanki sought to establish that Ambani had been “at best economical with the truth” in his evidence statements to the court in relation to his financial means.
“Are we seriously to believe that his own mother, wife, and sons can’t help him in his hour of need for the purpose of complying with a conditional order,” Thanki asked. He also said Ambani’s statements are “plainly a yet further opportunistic attempt to evade his financial obligations to the lenders”.
Judge David Waksman criticised a lack of candour and transparency on the part of Ambani’s defence in reference to his financial means and ordered the Reliance Group chairperson to pay $100 million within six weeks as a deposit in the lawsuit. “Ambani has not satisfied me that he can’t make any payment at all,” the judge added.
The banks 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 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.
A senior Reliance Group official said that based on the legal advice, Ambani would seek remedies in appeal and is confident that he will have the opportunity to establish that the Chinese claim is without any merit.