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The Mumbai bench of NCLT has admitted an insolvency plea against the Kishore Biyani-owned Future Retail Ltd. It has also rejected Amazon’s petition opposing the Bank of India’s initiation of insolvency resolution proceedings against Future Retail Ltd.
While admitting the matter, the two-judge bench of Pradeep Narhari Deshmukh and Shyam Babu Gautam said Vijaykumar V Iyer of Deloitte would be appointed as the interim resolution professional of the company.
Amazon was opposing the insolvency petition on grounds that it would destroy the value of the company. The American e-commerce giant is a shareholder in Future Retail through an equity stake it picked in Future Coupons.
On April 14 this year, BoI filed insolvency proceedings against Future Retail for non-payment of dues. Future Retail owes banks Rs 5,322.32 crore as of March 31, according to Bank of India’s petition in the NCLT. Lenders to the company include Union Bank of India, State Bank of India, Bank of Baroda, and IDBI Bank, among others.
Amazon claimed that BoI and Future Group were working in tandem and Future Retail’s agenda was “malicious.” It also alleged that lenders to FRL were colluding with the Biyani-led company by initiating the sale of the distressed company’s assets to Reliance Retail. Whereas BoI had argued that it was “fully satisfied” with all the parameters under law.
In 2019, Amazon had invested Rs 1,400 crore in Future Coupons for a 49 per cent stake, by virtue of which the US company got a 7.3 per cent foothold in Future Retail.
Soon after the investment, Future Retail fell prey to the mayhem caused by the Covid-19 pandemic. This led the promotors to pledge more shares as its stock prices took a hit. Along with this, its retail business, too, took a hit.
Eventually, in August 2020, it decided to sell its wholesale and retail business to Reliance Retail for Rs 24,713 crore. This led Amazon to drag Future Group into arbitration, where it was granted an interim award in its favour. It later moved Indian courts to stall its Rs 24,713-crore deal with Reliance. The same was challenged by Future Group, while it was facing a severe cash crunch.
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