Future Retail: Bankruptcy court admits Bank of India’s insolvency plea against Future Retail

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The bankruptcy court on Wednesday admitted the application for admission under the corporate insolvency resolution process (CIRP) and also appointed Vijay Kumar Iyer as the company’s interim resolution professional (IRP).

The Mumbai bench of the National Company Law Tribunal (NCLT), presided over by Judges PN Deshmukh and Shyam Babu Gautam, while admitting that Kishore Biyani had promoted Future Retail, also dismissed a claim filed by Amazon.com NV Investment Holdings which sought dismissal of the lender’s plea. to admit the company under resolution of insolvency.

Earlier, on June 27, the court reserved its order after hearing arguments from lawyers for Bank of India, Future Retail and Amazon.com.

Agencies

State-owned lender Bank of India had launched a resolution process against the BSE (FRL) following the default of Rs 3,495 crore on the one-time restructuring plan between the bank and the company.

At the time of filing the motion to admit the company to the resolution process, lead counsel Ravi Kadam, appearing for the bank, advised that the consortium of lenders supported this motion and argued that to protect the company’s assets , it is necessary for the court to grant this request.

Lenders have dues of over Rs 17,500 crore, which include Rs 3,700 crore offshore bonds and Rs 13,800 crore borrowings from local banks. The Company’s assets include 620 stores, including 30 Big Bazaar hypermarkets and 350 smaller format outlets.

The Bank of India had, on April 14, filed for bankruptcy Future Retail for non-payment of dues due under the terms of the framework agreement concluded between Future Group and the lender.

However, e-commerce major Amazon.com had requested the dismissal of this means of insolvency resolution, arguing that the request filed by the lender is an act of “maliciousness and collusion” with the company and its promoter Kishore Biyani. . Amazon also asked the court to open an investigation into the “fraudulent and malicious” intentions and to impose a sanction on the two banks and the FRL.

“Soon after the court admits the motion, the Interim Resolution Professional will initiate the process of appealing the claims and upon verification of the claim, will proceed with the formation of the creditors’ committee,” Ashish Pyasi said. , associate partner of the law firm Dhir & Dhir associés. “At the same time, IRP will take over the assets and management of the company to conduct the resolution process and the powers of the existing board of directors will remain suspended.”

In April, in its regulatory filing with the exchanges, FRL said 69% of lenders voted against the plan while 30% backed it. No less than 83% of the secured creditors of Future Lifestyle Fashion, the group’s second listed entity, also rejected the proposed sale to

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In 2020, Future Group had decided to combine its two dozen listed and unlisted companies and sell them on a sell-down basis to rival Reliance Retail for around Rs 25,000 crore as debt ballooned.

The Amazon-Future dispute stems from a 2019 investment by the US giant to acquire 49% of promotions company Future Coupons Pvt Ltd (FCPL), which owned around 10% of FRL. The US e-commerce major has accused Future Group of breach of contract by agreeing to sell its assets to Reliance, which it said was not permitted under the 2019 investment deals.

Reliance had taken possession of 835 stores as unpaid rents piled up to around Rs 4,800 crore.

Amazon and the Future Group have filed petitions and counter-petitions regarding the deal in several legal forums. Amazon says the terms of its 2019 investment in a venture promoting Future Retail gave it first right of refusal in any sale of a stake in the Indian retailer and barred it from selling a stake to Reliance entities.

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