After Reliance Retail scrapped its plans to buy assets of Big Bazaar parent Future Retail (FRL) for £2.47 billion, in a big blow to US e-tailer Amazon, India’s National Company Law Tribunal (NCLT) has now allowed the initiation of insolvency proceedings against debt-ridden FRL.
The lenders to FRL, along with a resolution professional, can now initiate bankruptcy proceedings against the Mumbai headquartered retailer, call for bids from potential applicants and even go for liquidation of the company’s assets to recover dues.
The development, which comes against the backdrop of the downfall of Future Group was triggered by the pandemic and a multi-pronged legal battle with Amazon, which has used its 2019 investment in Future Coupons, a Future Group entity, to block the Reliance-Future deal, claiming that the transaction gave it protective rights over FRL.
While the Kishore Biyani-led retailer’s biggest lender Bank of India (BoI) had moved NCLT in April, seeking to initiate bankruptcy proceedings after FRL defaulted on loan repayments, Amazon objected in May, alleging that lenders colluded with FRL and bankruptcy proceedings will threaten the e-commerce company’s rights. Admitting the lender’s plea, the Mumbai bench of the tribunal, rejected Amazon’s objection and appointed Vijay Kumar V Iyer as the resolution professional for FRL. Amazon, which is likely to move National Company Law Appellate Tribunal (NCLAT), did not comment on this story.
Future Group companies, along with FRL, Future Enterprises (FEL) and others together owed lenders and creditors around £2.9 billion in May, according to sources. State Bank of India, Bank of Baroda are some of the biggest lenders to Future Group companies. Reliance had called off the deal in April as a majority of FRL’s secured creditors voted against the transaction, the move had left the Future Group staring at insolvency proceedings.
