NCLT to hear Amazon’s plea against Future Retail’s insolvency on Monday

BL Mumbai Bureau | Updated on: Jun 16, 2022

The e-commerce giant’s counsel argued that FRL’s lenders had colluded with the company and hence bankruptcy court should not admit the case

 The National Company Law Tribunal (NCLT) has adjourned Amazon’s plea against a move by the Bank of India to put debt-laden Future Retail under the insolvency process. The insolvency petition, filed in May, had come up for hearing before the Mumbai bench on Thursday.

The bench, led by Justice Pradeep Narhari Deshmukh, was hearing Amazon’s side on why its plea was maintainable and will take up the case again on Monday.

Senior Counsel Rajiv Nayer, appearing on behalf of Amazon said the lenders to Future Retail were colluding with the retail company, and hence, the bankruptcy court should not admit the case. He also said despite an arbitration agreement between Future Group and Amazon, the former refused to accept the emergency arbitrator’s award.

Amazon will conclude its remarks on Monday, and the court will hear Bank of India’s petition on Tuesday.

The backstory

On April 14, Bank of India, the lead banker of the lender consortium to the retailer, filed the petition before the NCLT to initiate insolvency proceedings against FRL. Amazon, however, had filed an intervention application and asked the court to make it a party in the matter. It filed a petition that essentially opposed the insolvency petition alleging that the consortium of 26 banks had colluded with the Future Group to obstruct and deny Amazon of its rights.

Ravi Kadam, senior counsel representing Bank of India, had opposed Amazon’s petition on the matter, terming it as a “useless” application. While objecting the maintainability of Amazon’s petition, Kadam had reiterated that Amazon should not be allowed to intervene in the matter and refused to respond on any of the application by a third party(Amazon).

He also added that Amazon’s application was an attempt to delay the insolvency proceedings against FRL. The ₹24,713-crore deal between Reliance Industries and Future Retail was derailed with nearly 70 per cent of the secured credtors rejecting the proposal. The results of the shareholders’ voting that had taken place in April were disclosed by Future Retail.

However, Reliance Retail did take the possession of at least 900 stores leased to Future Retail. Amazon’s lawyers alleged that despite knowledge back then, the lenders did not do anything about it. In August 2020, Reliance had agreed to buy out assets of multiple companies of Future Group. It had decided to buy the assets for the logistics, retail and wholesale businesses of the Kishore Biyani–owned company, among others, for a valuation of ₹24,713 crore.

However, Amazon, which had invested ₹1,400 crore in one of the Future Group companies in 2019 had opposed this deal. It had dragged Future Group’s companies into arbitration on grounds that it violated an agreement in which Reliance was a restricted party.

Published on June 16, 2022
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