The National Company Law Tribunal (NCLT) on Wednesday ordered insolvency resolution proceedings against Future Retail Ltd (FRL) and dismissed the objection raised by Amazon, which is embroiled in a legal tussle with the company run by Kishore Biyani.
The Mumbai bench of the NCLT has also appointed Vijaykumar Iyer as the Interim Resolution Professional (IRP) for FRL. “NCLT has issued its order today, granting admission of the said petition of Bank of India on an alleged amount of default of Rs 1441.62 crore,” FRL said in an exchange filing. The NCLT also denied the application to intervene filed by Amazon.com NV Investment Holdings LLC, under Section 65 of the Code, it added.
On May 12, Amazon filed for action under Section 65 of the Insolvency and Bankruptcy Code (IBC) which deals with penalty provisions for the fraudulent or malicious commencement of proceedings. Future Group’s proposed deal with Reliance Industries (RIL) which involved FRL was also opposed by Amazon. However, the deal was later called off.
The total lender exposure to Future Group is set at Rs 27,000 crore. As of September 2021, FRL’s gross debt stood at Rs 13,346.78 crore, while three of the other listed entities in the group had a combined gross debt of Rs 5,863 crore. RIL’s plan to take over 19 entities from the Future Group has not received approval from secured creditors.
To protect the assets of FRL
A consortium of lenders, led by Bank of India, had filed for insolvency proceedings against Future Retail and moved the NCLT in a bid to protect the assets of the debt-ridden company.
Regulatory standards state that a company’s lenders must make additional provisions of 20% if a resolution plan for a troubled asset is not found within 180 days of the end of the review period. asset.
In April, Bank of India (BoI) filed the petition in court after FRL failed to pay Rs 3,495 crore under the one-time restructuring plan. Amazon had opposed BoI’s petition alleging that the lender colluded with FRL and that any bankruptcy proceedings at this stage would jeopardize the rights of the e-commerce company.
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Big Bazaar is Future Retail’s flagship chain.
Reliance Retail, the retail arm of oil-telecom conglomerate RIL, had agreed in August 2020 to take over the retail and logistics business of Future Group for Rs 24,713 crore, but the deal could not be finalized. concluded as a warring partner of Future Amazon went to court for breach of certain contracts.