SpaceMantra, the winning bidder to take over Kishore Biyani’s retail brand outlet Future Lifestyle Fashions (FLFL), has withdrawn its resolution plan for the company days before lenders overwhelmingly voted for it, putting creditors of the debt-laden company in a quandary.
SpaceMantra, promoted by former NBCC chairman Anoop Kumar Mittal, along with two individuals, Sandeep Gupta and Shalini Gupta, had emerged as the sole bidder for FLFL after almost an 18-month process since the company was admitted to bankruptcy in May 2023.
The retailer of construction, building material and office furniture had placed a ₹490 crore bid to beat the early interest shown by Donear Industries among others.
The company was supposed to pay ₹490 crore within 90 days of the NCLT approval according to its timeline submitted to lenders, working out to a 14% recovery for creditors. However, even as lenders put to vote its proposal earlier this month, the SpaceMantra-led consortium changed its mind. In a letter to the resolution professional (RP) Ravi Sethia on September 25, the consortium said it was no longer interested in continuing its resolution plan.
“On account of the inordinate delay leading to erosion of the value of inventory and other assets of the corporate debtor and the changed circumstances in the intervening period, we are hereby informing you that we are no longer interested in continuing with our resolution plan and we are hereby withdrawing the process,” the letter accessed by ET said.
This letter, which came just two days before the end of the voting period, was followed by a creditors’ meeting on September 26 in which voting was concluded and subsequently the SpaceMantra consortium was unanimously declared the winning bidder through a stock market disclosure on September 28.
“It is imperative to note that the resolution plan submitted by the resolution applicant which was put to vote pursuant to the discussions of the 21st CoC meeting held on August 13 has been approved by the CoC with the requisite majority….Therefore you are required to comply with the terms and unconditionally accept the letter of intent issued to you by the undersigned on September 27,” RP Sethia said in an email response accessed by ET. Sethia did not reply to an email seeking comment.
A senior SpaceMantra official confirmed that the company has withdrawn from its bid for FLFL because of the delays in the process. The company did not reply to an email seeking comment.
Creditors are now insisting that the company complete its obligation and fulfil the payments due. “It seems that SpaceMantra was backed by a large corporate group which has pulled out. SpaceMantra, on its own, could never be taken seriously, but since it was the only bidder, banks had no choice but to accept the bid. This turn of events highlighted the challenges banks face in recovery as bidders can never be trusted to fulfill their commitment,” said a person aware of the details.
Creditors are now looking at impounding the ₹2 crore earnest money deposited by the consortium, but admit they have very little recourse beyond that.
The latest updated claims show that FLFL, the owner of retail chains Central and Brand Factory, owes creditors including bondholders a total of ₹3,478 crore. State Bank of India (SBI) is the lead lender with claims of ₹477 crore. Bondholders represented by Catalyst Trusteeship and Centbank Financial Services are owed about ₹1,100 crore. SBI did not reply to an email seeking comment.
At its peak, FLFL used to operate more than 300 stores selling clothes, footwear and accessories of various third-party and in-house brands.
Source: Economic Times