NCLT orders liquidation of Future Retail as debt resolution fails
31 Jul 2024
The Mumbai bench of the National Company Law Tribunal (NCLT) has ordered the liquidation of Future Retail Limited (FRL) as the committee of creditors (CoC) failed to arrive at a resolution plan even after the expiry of the maximum period for the corporate insolvency resolution process (CIRP).
A bench comprising judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan passed the order on a petition filed by resolution professional Vijaykumar Iyer.
The tribunal appointed Sanjay Gupta as the official liquidator and also directed sale of Future Retail as a going concern in order to maximise the value of the corporate debtor.
Future Retail owes more than Rs17,000 crore to its financial and business creditors.
While under the failed resolution plan, lender banks were getting only a third of their loans, liquidation means banks will lose 90 per cent of their money.
The tribunal noted that the CoC considered only one resolution plan and that too failed to get support from majority of creditors when it was put to vote.
Bank of India initiated the insolvency proceedings against Future Retail following a failed Rs24,713-crore takeover deal by Reliance.
Secured creditors, including Amazon, another contender for Future Retail’s assets, were opposed to the Reliance-Future Retail deal.
By entering into a takeover deal with Reliance, Future Retail had also sidestepped a framework agreement with Bank of India for availing a credit facility from a consortium of lenders, comprising Axis Bank, Andhra Bank and others.
Bank of India filed an insolvency petition against FRL under the Insolvency Bankruptcy Code, 2016 (IBC) for failure to honour the agreement.
NCLT noted that the CoC failed to come up with a resolution plan even after the expiry of the CIRP and allowed the petitioner’s application for liquidation of Future Retail.
