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With big companies staying away from bidding for Future Retail, its resolution professional, seeking to maximise value, has filed petitions with the National Company Law Tribunal for avoidance transactions worth over ₹1,000 crore.
Avoidance transactions are financial deals entered into by a corporate debtor and they put creditors at a disadvantage or give preference to some creditors over others. The Insolvency and Bankruptcy Code provides for avoidance transactions to secure the interests of the lenders, and these include preferential transactions and undervalued transactions.
One of the transactions that were flagged was for ₹839 crore paid by Future Retail to group company Future Consumer. The transaction pertains to the years FY21 and FY22. There are eight other such transactions for much smaller amounts and these were with individuals and small entities during the year FY21.
The applications have been filed following a report made by Nangia & Co, which was appointed as a transaction review auditor to assist the RP.
Last week, the RP sought the intervention of the court to get a refund from Future Consumer for the amount paid to it.
The response to Future Retail’s resolution under the bankruptcy process has been dismal with resolution plans and bids being received only from six entities, a couple of them being furniture dealers, an e-waste recycler, a private charter operator and a marketplace firm for interior design products called Space Mantra.
₹21,000-crore dues
Sources indicated that the bids were not substantial with five of the six entities having bid only for some of the assets and only Space Mantra making a bid for the company. The lenders are claiming over ₹21,000 crore of dues from the bankrupt retail company. Getting back money paid to related parties or vendors is one of the ways to improve the chances of resolution for the company and for the creditors to get back at least some of what they claim.
Future Retail came under the bankruptcy court in July last year.
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