Insolvency proceedings: NCLT to hear Future Retail’s case on May 12

The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday sought responses from Future Retail (FRL) on a petition by Bank of India (BoI), seeking initiation of insolvency proceedings against the ailing retail chain.

The tribunal’s bench, comprising Justice PN Deshmukh and member SB Gautam, will hear the case on May 12. The tribunal will initially consider whether to admit this petition, and once it admits the petition, all ongoing court proceedings involving the company would be suspended.

A moratorium is also imposed on the company on alienation of assets.

BoI, which has an exposure of Rs 1,441.62 crore to the Kishore Biyani-led FRL, had moved the NCLT in mid-April to recover the debt. The lender has also sought appointment of Vijaykumar Iyer, partner at Deloitte, as the insolvency professional. BoI was represented by senior counsel Ravi Kadam.

The total exposure of banks to FRL is estimated to be at about Rs 17,000 crore and the figure could climb to as high as Rs 25,000 crore, if debt defaults continue, some of its creditors said in a court proceeding in a separate matter.

BoI is also the lead lender in the banks’ consortium.

The consortium also includes State Bank of India, Axis Bank, Corporation Bank, IDBI Bank, Bank of Baroda and Punjab National Bank, among others.

Separately, Delhi-based Foresight Innovations has moved NCLT Mumbai seeking to initiate a resolution process against Future Enterprises (FEL), another group entity. The firm, which is into furnishing and interiors of ATMs and retail segment, is seeking dues of about Rs 2.5 crore from FRL. The New Delhi-based company is an operational creditor to FRL. The case is yet to be admitted by the NCLT.

In 2020, Future Group had signed a deal to sell its retail, logistics and warehousing businesses to Reliance Retail, a subsidiary of billionaire Mukesh Ambani-controlled Reliance Industries (RIL), for Rs 24,713 crore.

However, the deal got entangled in legal tussles after US e-commerce major Amazon opposed the scheme, citing the 2019 agreement it had entered into with Future Group. Amazon, which acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, for about Rs 1,500 crore, alleged violation of certain terms in the deal signed in 2019.

The case is now being heard across forums including the Supreme Court, the National Company Law Tribunal and the Singapore International Arbitration Centre.