Bank of India moves NCLT as lead lender to Kishore Biyani-led Future Retail

In a first such move, public sector lender Bank of India (BoI) has taken Kishore Biyani-led Future Retail Ltd (FRL) to the National Company Law Tribunal (NCLT) for initiating resolution proceedings under the Insolvency and Bankruptcy Code.

Mumbai-based BoI--the lead bank in the consortium of lenders to Future Retail—has moved NCLT in an attempt towards debt resolution. The total exposure of banks is estimated at around Rs 17,000 crore.  

While BoI's loan exposure to Future Retail is Rs 1,441.62 crore, others in the lenders’ consortium include Axis Bank, Andhra Bank, State Bank of India, Corporation Bank, IDBI Bank, Union Bank of India, Bank of Baroda, Central Bank of India, Punjab National Bank and Vijaya Bank.

BoI has suggested that the insolvency tribunal appoint Vijay Kumar V Iyer as the interim professional of the company.

As part of the Rs 24,713 crore deal announced by the Future Group in August 2020, FRL is to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL).

Referring to the latest move by BoI, bankers said there’s an option to consider liquidation action in future if resolution efforts fail. The consortium decided that the lead lender would  file an application under IBC.

According to Future Retail filings on the BSE, BoI has served an advance intimation of filing an application under Section 7 of the IBC 2016 against the company. This is for default on non-payment of monies due in terms of the framework agreement entered into between the two parties.

“We have received a copy of the petition and are in the process of taking legal advice,” FRL said. The application is expected to come up before the Mumbai bench of NCLT. No date has been notified for the same.

Lenders are also looking to approach the Debt Recovery Tribunal (DRT) to secure lenders’ interest and protect value of assets. Banks are already treating exposure to FRL as a non-performing asset and have begun making provisions for the same.
 

Earlier this month, Bank of India’s counsel said in the Supreme Court that it would like to withdraw its intervention application. The three-judge bench permitted the bank’s application to be withdrawn.

BoI's counsel had informed the court that it was looking at other options.

In February, Future Retail had sought two weeks from the Supreme Court to hammer out a solution with lenders on the issue of clearing dues and avoid being tagged a non-performing asset (NPA). The counsel to the lenders had suggested an open bid between Amazon and RIL to settle the dispute and ensure recovery for banks.

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.

Future Group companies will conduct meetings of their respective shareholders and creditors between April 20 and 23 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.