Bank Of India Initiates Insolvency Against Future Group

The application by Bank of India has been filed under section 7 of the Insolvency and Bankruptcy Code, 2016, an exchange filing by the Kishore Biyani-led company said. 

At present the cash-strapped firm has debt of over ₹27,000 crores that it owes to various lenders.   

Additionally, the bank’s decision in all likelihood will bring to a halt the asset sale deal between Future-Group and Reliance Industries Ltd, worth ₹24, 713 crores, signed in August 2020.  

Earlier, Future Retail’s directors said the company needs  ₹12,027 crore for honouring its debt to lenders and vendors up to March 2022, the timeline for which has been lapsed. 

Future Retail has already missed the first deadline to repay  ₹3,494 crore to the bank following which the Bank has initiated recovery action against the company.  

This move by Bank of India comes after Reliance Industries took over 200 Future Retail stores. The takeover of stores led to the bankers being concerned about recovery of their dues. 

On 15 March, lenders published an advertisement stating that anybody dealing in assets of the company should keep in mind that these are subject at all times to the charge of the lenders. 

They said the charge can be pursued and enforced against anyone dealing in these assets. 

Bankers had earlier said procedures to take Future Retail to the bankruptcy courts are ready as well; however, all banks had not agreed to this as admitting the company under the Insolvency and Bankruptcy Code (IBC) triggers an immediate moratorium on fresh recovery proceedings or attempts to enforce security interest, reducing the possibility of any quick recovery. 

That said, a banker at a state-run bank said they have chosen nclt as the process is more transparent than drt. “We want to follow the due process and do it in a transparent manner, considering there’s already so much litigation around it.”