The resolution professional (RP) of Future Retail Limited has approached the Mumbai bench of the National Company Law Tribunal (NCLT) to request the initiation of liquidation proceedings for the company, as stated in a regulatory filing. The filing indicates that Space Mantra's resolution plan did not receive approval from the Committee of Creditors (CoC) of Future Retail. This application was made under Section 33 of the Insolvency and Bankruptcy Code (IBC).
According to Section 33 of the IBC, the CoC can decide to liquidate the corporate debtor at any point after its establishment and before the confirmation of the resolution plan. Space Mantra, an online marketplace provider for the construction and interior industry, was the sole bidder for FRL through the insolvency process.
Apart from Space Mantra, five other companies submitted bids, including Pinnacle Air, Palgun Tech LLC, Lehar Solutions, Goodwill Furniture, and Sarvabhishta E-waste Management. Space Mantra placed a bid of Rs 550 crore.
The company released a statement saying, "The resolution professional has filed an application before the National Company Law Tribunal (NCLT), Mumbai bench, for the initiation of FRL's liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016, on November 9." Space Mantra's plan was rejected in a vote on September 30, receiving only 42% support, falling short of the required 66% for approval.
As per regulations of the Insolvency and Bankruptcy Board of India (IBBI), the RP is obligated to submit an application to the NCLT in line with the voting results. The Corporate Insolvency Resolution Process (CIRP) against Future Retail was initiated by its lender, Bank of India, due to loan defaults last year.
Under the Insolvency & Bankruptcy Code, Expressions of Interest (EoI) were solicited from potential bidders on October 4, 2022. In July 2022, the National Company Law Tribunal (NCLT) accepted an insolvency petition filed by the Bank of India against Future Retail. Vijay Kumar V Iyer was appointed as the resolution professional, commencing the bankruptcy proceedings of the debt-laden retailer.
In July, the Mumbai bench of NCLT admitted BOI's petition under Section 7 of the Insolvency and Bankruptcy Code to initiate insolvency proceedings against Future Retail and also appointed an interim resolution professional. In August 2022, Future Retail received a letter from BOI seeking representation and submissions from the company, Kishore Biyani (promoter/director/guarantor), and Rakesh Biyani (promoter/erstwhile director) concerning a forensic audit report dated August 9, which was provided to BOI by BDO India LLP, the forensic auditor appointed by BOI.
FRL owes its creditors, primarily led by Bank of India, over Rs 19,000 crore, based on claims submitted and approved during the insolvency process until August 24. These creditors include Bank of New York Mellon, Bank of Baroda, Union Bank of India, and Central Bank of India.
