The bankruptcy court on Monday admitted Future Group’s affiliate Acute Retail Infra Pvt Ltd for Corporate Insolvency Resolution Process (CIRP) in an application filed by Avendus Finance Pvt Ltd after the company defaulted on its dues of over Rs 65 crore.
The Mumbai bench of the National Company Law Tribunal (NCLT) while admitting the company has also appointed Ramesh M. Shetty as interim resolution professional (IRP) of the company.
“During the CIRP period, the management of the corporate debtor will vest in the IRP/RP,” said the division bench of judicial member Reeta Kohli and technical member Madhu Sinha in its order of September 23. “The board of directors of the Corporate Debtor shall stand suspended.”
Before the tribunal’s order, counsel Nausher Kohli, on behalf of Avendus Finance argued that along with Shapoorji Pallonji Finance Pvt Ltd and Visu Leasing and Finance Pvt Ltd, it agreed to provide a term loan facility of Rs 115 crore to the Acute Retail Infra.
Under the original loan agreement, out of the total amount of Rs. 115 crores, Avendus Finance committed Rs. 66 crores which was disbursed to the Acute Retail Infra in March 2018. The lender further argued that the Future Group-affiliated Acute Retail Infra defaulted on its dues in April 2022.
The lender argued that Acute Retail Infra and Future Retail Ltd (FRL) agreed, wherein, the debtor company had leased out some equipment owned by it such as plant and machinery, spares, and tools to FRL against the payment of lease rentals.
Under the Facility Agreement of March 9, 2018, Acute Retail Infra agreed to deposit the lease rentals receivable by it from FRL into an escrow account, and accordingly, the escrow agreement was executed between the corporate debtor, security trustee and HDFC Bank (escrow bank).
The company further argued that FRL failed to make the payments towards the lease rentals from March 2022, therefore, triggering an event of default under the Master Lease Agreement and Facility Documents. Subsequently, the lender issued a notice to the company in April 2022.
However, countering this, advocate Malhar Zatakia, appearing for the company argued that it is a running entity having employees and thus no fruitful purpose would be served if the same is subjected to CIRP.
Currently, several companies including Future Retail, Future Enterprises, Future Supply and Chain and Future Lifestyle and Fashion are among the key companies promoted by Kishore Biyani that are undergoing a corporate insolvency process.
