Future Retail's resolution professional files for liquidation before NCLT

Future Retail’s Resolution Professional (RP) has filed for the initiation of liquidation before the Mumbai bench of the National Company Law Tribunal (NCLT), it said in a stock exchange filing on Friday. 

The company also noted in the filing that the resolution plan submitted by Space Mantra has not been approved by the Committee of Creditors (CoC) of Future Retail.   

The highest bid then was from Space Mantra, and the other five companies that have placed their bids include Pinnacle Air, Palgun Tech LLC, Lehar Solutions, Goodwill Furniture and Sarvabhishta E-waste Management. 

On March 23 this year, creditors of the company invited new Expressions of Interest (EoIs) whereby prospective buyers can bid for the debt-ridden firm "as a going concern or individual cluster or a combination of clusters of its assets", as it failed to attract a resolution plan in more than four months.

It had received EoIs and finalised 11 prospective bidders, including Reliance and April Moon Retail, but could not get a resolution plan despite two extensions in the deadline for submissions.

The CoC had provided two options in the EoI and the last date for submission was April 7, 2023.

In the first option, the Prospective Resolution Applicant (PRA) could bid for the acquisition of FRL as a whole, including its shareholding interest in the subsidiaries.

Under the second option, Future Retail’s business has been distributed into five clusters and PRAs can bid for "any individual cluster or any combination of clusters".

"Having regard to the complexity and scale of operations of FRL, the resolution professional had, in consultation with and prior approval of the CoC of FRL, categorised the business of the corporate debtor in five clusters," as per the new EoI.

The Corporate Insolvency Resolution Process (CIRP) was initiated against Future Retail by its lender Bank of India (BOI) following loan defaults.

Under the Insolvency & Bankruptcy Code, EoI was invited from prospective bidders on October 4, 2022.

The Mumbai bench of NCLT in July admitted the BOI’s petition under Section 7 of the Insolvency and Bankruptcy Code to start insolvency proceedings against Future Retail and also appointed an interim resolution professional.

In August, Future Retail received a letter from BOI seeking representation/submissions from the company, Kishore Biyani (promoter/director/guarantor) and Rakesh Biyani (promoter/ erstwhile director) on forensic audit report dated August 9 which was submitted to BOI by BDO India LLP. 

BDO India LLP is the forensic auditor appointed by BOI. 

The bank had then said in its letter to the company, “If no written submission is made by you within 15 days of receipt of this communication, it shall be presumed that you do not have any such say in the matter.” 

It also said, “Upon expiry of the above period, the bank shall proceed ahead with an examination of fraud angle in terms of RBI Master Circular/Bank guidelines on fraud classification and reporting.”  

FUTURE TENSE
 

- Future Retail’s Resolution Professional (RP) has filed for the initiation of liquidation before NCLT

- CoC of Future Retail did not approve the resolution plan submitted by Space Mantra - the highest bidder

-­ Others that bid for FRL assets include Pinnacle Air, Palgun Tech LLC, Lehar Solutions, Goodwill Furniture, and Sarvabhishta E-Waste Management
 

- In July last year, the Mumbai bench of NCLT admitted the Bank of India’s petition under Section 7 of the Insolvency and Bankruptcy Code to start insolvency proceedings against Future Retail