NEW DELHI: The National Company Law Tribunal (NCLT) on Wednesday authorized the opening of bankruptcy proceedings against indebted Big Bazaar parent company Future Retail (FRL).
As a result, FRL’s lenders, along with a liquidator, can initiate bankruptcy proceedings against the Mumbai-headquartered retailer, solicit bids from potential suitors, and even liquidate the company’s assets to collect fees.
The development, which comes as Reliance Retail scraps plans to buy FRL’s assets for Rs 24,700 crore, comes as a major blow to US e-tailer Amazon.
While the largest lender to Kishore Biyani-led retailer Bank of India (BoI) moved NCLT to begin bankruptcy proceedings in April after FRL defaulted on loan repayments, Amazon objected in May, claiming that the lenders were involved with FRL conspired and threatened bankruptcy rights of e-commerce companies.
The Chamber of the Mumbai Tribunal allowed the lender’s objection, dismissed Amazon’s objection and appointed Vijay Kumar V Iyer as FRL settlement officer. Amazon, which is likely to go before the National Company Law Appellate Tribunal (NCLAT), has not commented on the story.
Future Group companies along with FRL, Future Enterprises (FEL) and others collectively owed around Rs.29,000 to lenders and creditors in May, sources said. SBI and Bank of Baroda are some of the largest lenders to Future Group companies.
Future Group’s demise was prompted by the pandemic and a multi-pronged legal battle with Amazon, which used its 2019 investment in Future Coupons, a Future Group company, to block the Reliance futures deal, claiming the transaction gave him protection rights over FRL.
While Reliance called off the transaction in April because a majority of FRL’s secured creditors voted against the transaction, the move had left Future Group staring at bankruptcy proceedings.
As a result, FRL’s lenders, along with a liquidator, can initiate bankruptcy proceedings against the Mumbai-headquartered retailer, solicit bids from potential suitors, and even liquidate the company’s assets to collect fees.
The development, which comes as Reliance Retail scraps plans to buy FRL’s assets for Rs 24,700 crore, comes as a major blow to US e-tailer Amazon.
While the largest lender to Kishore Biyani-led retailer Bank of India (BoI) moved NCLT to begin bankruptcy proceedings in April after FRL defaulted on loan repayments, Amazon objected in May, claiming that the lenders were involved with FRL conspired and threatened bankruptcy rights of e-commerce companies.
The Chamber of the Mumbai Tribunal allowed the lender’s objection, dismissed Amazon’s objection and appointed Vijay Kumar V Iyer as FRL settlement officer. Amazon, which is likely to go before the National Company Law Appellate Tribunal (NCLAT), has not commented on the story.
Future Group companies along with FRL, Future Enterprises (FEL) and others collectively owed around Rs.29,000 to lenders and creditors in May, sources said. SBI and Bank of Baroda are some of the largest lenders to Future Group companies.
Future Group’s demise was prompted by the pandemic and a multi-pronged legal battle with Amazon, which used its 2019 investment in Future Coupons, a Future Group company, to block the Reliance futures deal, claiming the transaction gave him protection rights over FRL.
While Reliance called off the transaction in April because a majority of FRL’s secured creditors voted against the transaction, the move had left Future Group staring at bankruptcy proceedings.
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