Bank Of India has initiated insolvency proceedings against Future Retail
Bank of India has moved the National Company Law Tribunal (NCLT), filing a petition to initiate insolvency proceedings against debt-ridden Future Retail Ltd (FRL).
Earlier this month, FRL had reported a default of Rs 5,322.32 crore to its lenders on account of the ongoing litigations with e-commerce major Amazon and other related issues.
"Bank of India has served an advance intimation of filing an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the company for default on non-payment of monies due in terms of the Framework Agreement entered into between the company and Bank of India," FRL said in a regulatory filing.
The Future group firm said it has received a copy of the petition and is in the "process of taking legal advice".
Bank of India, the lead banker of the consortium of lenders of FRL, had last month through a public notice in newspapers claimed its charge over the assets of FRL and warned the public against dealing with assets of the Kishore Biyani-led Future group firm.
Several Future Group companies, including FRL, had entered into agreements with their respective lenders in terms of the RBI circular dated August 6, 2020, in which a resolution framework for COVID-related stress was announced.
FRL is part of the Rs 24,713 crore deal announced by Future Group in August 2020, under which it is to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL).
All 19 companies would be consolidated into one entity - Future Enterprises Ltd - and then transferred to RRVL under the proposed deal.
Future Group companies will be conducting meetings of their respective shareholders and creditors between April 20-23, 2022 to seek their approval for the Rs 24,713 crore deal.
The deal is contested by Amazon and is under litigation at various forums, including the Supreme Court, Delhi High Court and Singapore International Arbitration Center.
Earlier this week, Amazon warned FRL against holding meetings of its shareholders and creditors to approve the sale of its retail assets to Reliance Retail.
In a 16-page letter to Kishore Biyani and other promoters on April 12, the US e-commerce giant said such meetings are illegal and would not only breach 2019 agreements when Amazon made investments into FRL's promoter firm but also violate a Singapore arbitral tribunal's injunction on the sale of retail assets to Reliance.