Future Retail saga: NCLT admits Bank of India’s petition to initiate insolvency proceedings

The Mumbai bench of National Company Law Tribunal (NCLT)  on Wednesday said that it has admitted Bank of India (BoI) petition under section 7 for initiating insolvency process against debt-ridden Future Retail Ltd (FRL). BoI is the lead lender for FRL.

The bench also dismissed Amazon’s intervention application. Amazon had moved NCLT on grounds that its investment in Future Retail’s group company Future Coupons will be not protected in case Future Retail goes to insolvency.

The dismissal means that FRL can now face insolvency proceedings.

Also, the bench has appointed Vijay Kumar Iyer as interim resolution professional.

In April this year, BoI had moved the tribunal seeking to initiate insolvency resolution proceedings against FRL, which has defaulted on loan repayments.

Amazon had argued that FRL did not honour the Singapore Emergency Arbitrator’s award of October 2020 and that the lenders could not have entered into a framework agreement with FRL in breach of the award. It had moved the Emergency Arbitrator in Singapore for alleged breach of contract by FRL.

BoI had submitted that the lender’s plea against FRL has no connection with Amazon as the proceedings are in line with the Reserve Bank of India (RBI) guidelines and the provisions of the Insolvency and Bankruptcy Code (IBC).

Opposing BoI’s plea, Amazon, on May 12, filed an intervention application under Section 65 of the IBC that deals with provisions relating to penalty for fraudulent or malicious initiation of proceedings.

FRL has defaulted on payment of Rs 5,322.32 crore to its lenders amid the ongoing litigations with Amazon and other related issues. Future Group’s proposed deal with Reliance, which was opposed by Amazon, also fell through.

In March, BoI through a public notice claimed its charge over the assets of FRL and warned the public against dealing with assets of the Kishore Biyani-led Future group firm.

Last month, the tribunal had reserved its order on the petition filed by Amazon opposing Bank of India’s plea against FRL.

(With inputs from Aneesha Mathur and agencies)