Bank of India has filed an insolvency petition against Future Retail Ltd (FRL) at the bankruptcy court for non-payment of dues, the retailer said in a notice issued to stock exchanges on Thursday evening.
The company said it defaulted on payment of monies due in terms of the framework agreement it entered with the bank. The decision of lenders to file an application with National Company Law Tribunal (NCLT) will have a bearing on the Rs 24,713-crore offer that Reliance Industries-linked entities made to acquire Future Group companies in August 2020.
ET had reported on March 29 that lenders have decided to refer FRL to NCLT for insolvency proceedings. Bank of India has initiated recovery action against Future Retail following the Rs 3,495-crore default on the one-time restructuring scheme aimed at supporting companies that suffered due to Covid-19.
The bank has filed a petition with Mumbai bench on NCLT after the company failed to pay the dues or come up with a debt restructuring plan, people aware of the matter told ET.
Lenders have jointly decided to recommend Vijaykumar Iyer, backed by Deloitte India, as the interim resolution professional. Meanwhile, Future Enterprises has informed the stock exchanges on Thursday that it has defaulted on a Rs 1.2 crore payment on non-convertible debentures while Future Lifestyle said its independent director Sharada Sunder has resigned.
Lenders have claimed dues of over Rs 17,500 crore from Future Group, which include Rs 3,700-crore offshore bonds and Rs 13,800-crore borrowing from local banks. They have filed an application a week ahead of a creditors’ meeting scheduled on April 21 to vote on the scheme of arrangement proposed by Reliance Industries and Future Group on the multistage sale of Future assets.
The key factor that influenced their decision was the uncertainty of recovery, after Reliance took control of more than 800 of Future Retail’s 1,500 store sites over a month ago, citing non-payment of rentals, sources said. It takes a minimum of six months to admit a company into insolvency proceedings, despite the 14-day ceiling prescribed by the law.
If Future Retail does get admitted by NCLT, it will allow other potential buyers, such as Amazon, to bid for the company. The Future-Reliance deal is stuck due to legal challenges posed by Amazon.
