The Mumbai bench of the National Company Law Tribunal (NCLT) allowed a consortium of lenders, led by Bank of India (BoI), to initiate insolvency proceedings against Future Retail (RRL), which has defaulted on loan repayments.
Vijay Kumar Iyer of Deloitte has been appointed as the interim resolution professional (IRP) of the company. A bench led by Justice Shyam Babu Gautam and Justice Pradeep Narhari Deshmukh, after hearing both the parties at length, admitted the plea.
The NCLT’s ruling goes against US-based online retail behemoth Amazon, a stakeholder in Future Coupons. Amazon had objected to initiating insolvency proceedings against Future Retail, alleging that the lenders were colluding with Future Retail by initiating the sale of the distressed company’s assets to Reliance Retail, the retail arm of Mukesh Ambani-controlled Reliance Industries Ltd (RIL).
Earlier this year, BoI approached the tribunal seeking insolvency resolution proceedings against FRL. Amazon filed an intervention application on May 12 under Section 65 of the Insolvency and Bankruptcy Code that deals with provisions relating to fine for fraudulent or malicious initiation of proceedings.
The American company wrote to the Reserve Bank of India (RBI) alleging collusion by Future Retail and lenders, mentioning that Future Retail should not be allowed to go into bankruptcy proceedings as that would hit its rights further.
FRL has defaulted on payment of Rs 5,322.32 crore to its lenders amid the ongoing legal battle with Amazon and other related issues. Future Group’s proposed deal with Reliance, which was opposed by Amazon, also didn’t materialise.
In August 2020, the beleaguered FRL decided to sell its retail, wholesale and logistics arms that included businesses including Fashion at Big Bazaar, Koryo, Foodhall and Easyday to Reliance Retail for about Rs 25,000 crore.
However, Amazon, which had in 2019 bought 49 per cent stake in Future Coupons, which owns nearly 10 per cent in Future Retail, accused Future Retail of breach of contract for its agreement with Reliance Retail.
On April 23, in a stock exchange filing, RIL had said the $3.4 billion deal to take over the retail assets of Future Retail could not be implemented because the company’s secured creditors had “voted against the scheme.”
