InvestorQ : What is the latest on the Future Retail bankruptcy application?
indhumathi Sayani made post

What is the latest on the Future Retail bankruptcy application?

sara Kunju answered.
2 months ago

The Mumbai bench of the National Company Law Tribunal (NCLT) has bought time and reserved its orders pertaining to the petition filed by Bank of India to initiate corporate insolvency resolution process (CIRP) against Future Retail Ltd (FRL). When the company is under continuous default, the leader of the banking consortium can file this under section 7 of the Insolvency and Bankruptcy Code (IBC). Future group has been consistently defaulting on loans, including the interest payments after all its stores were taken over by Reliance.

Currently, Future Retail owes the consortium of banks led by Bank of India more than Rs15,000 crore. The bench comprising of Justice Shyam Babu Gautam and Justice Pradeep Narhari Deshmukh heard the arguments from both the sides and has now decided to reserve the matter for further consideration. Normally, a Section 7 is admitted within 14 days, but this petition has not been admitted even after 2 months. For the first, both Future Retail and Amazon are desperately looking to wind up the company.

In fact, Bank of India had submitted the insolvency petition on 14th April for non-payment of dues due under the terms of the agreement between Future Group and the bank. ON the other hand, this petition is being challenged by Amazon on the grounds that 26 banks including Bank of India had colluded with Future Group to deny Amazon of its rights. Ideally, Amazon was ready to take over Future group at a much lower price than offered by Reliance, but not the story is all but over.

The reason for the delay in admitting the petition is that Amazon filed an intervention application under section 65 of the IBC. This clause deals with provisions relating to penalty for fraudulent or malicious initiation of proceedings. The NCLT bench can impose the penalty on the applicant (Bank of India in this case) if it initiates CIRP fraudulently or with malicious intent. That is the allegation that Amazon has made against Bank of India via its intervention petition. It has prayed to the court to dismiss the banks petition.