NCLT begins insolvency process against Future Retail

NCLT begins insolvency process against Future Retail

The NCLT rejected Amazon's Intervention plea challenging the insolvency proceedings

The Mumbai Bench of the National Company Law Tribunal (NCLT) has ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against Future Retail Limited (FRL) and appointed an Insolvency Resolution Professional (IRP).

The bench comprising Justice PN Deshmukh and Technical Member Shyam Babu Gautam rejected an intervention application filed by Amazon challenging the insolvency proceedings.

FRL entered into a framework agreement with the Bank of India for availing credit facilities from a consortium of lenders including Axis Bank and Andhra Bank. However, it failed to honor the agreement, resulting in the Bank of India filing a CIRP application under the Insolvency and Bankruptcy Code (IBC), 2016.

Even as the matter was pending, Amazon filed an intervention application under IBC (fraudulent or malicious intent of proceedings). It challenged the insolvency proceedings on the ground that FRL was barred from disposing of or creating encumbrance on its assets.

Amazon said that FRL could not issue any securities to obtain funding from a restricted party as per the terms of the Singapore Emergency Arbitrator's award passed in 2020. Therefore, the application challenged the framework agreement entered into between FRL and the Bank of India.

Amazon's interest in FRL arises from the e-commerce giant's investment of Rs.1,500 crore in Future Coupons (FC), thereby acquiring a 49 percent stake. FC is a promoter of Future Group and holds a 9.82 percent stake in its retail segment. The deal resulted in Amazon holding a 4.81 percent stake in FRL.

The insolvency proceedings against FRL result from the failed deal between Reliance and FRL worth Rs.24,713 crores, which the secured creditors, including Amazon, opposed.

Amazon, meanwhile, secured the Emergency Arbitrator order from the Singapore International Arbitration Centre (SIAC) in its favor and filed an application.

Senior advocates Zal Andhyarujina and Rajiv Nayyar appeared on behalf of Amazon. They were assisted by a team from P&A Law Offices comprising Anand S Pathak, Amit Mishra, Shashank Gupta, Vijay Purohit, Sreemoyee Deb, Mohit Singh, Devna Arora, Anubhuti Mishra, Samridhi Hota, Shivam Pandey, Nikita Bangera, Pratik Jhaveri, Faizan Mithaiwala, and Didon Misri, and a team led by advocate VP Singh from AZB & Partners.

Senior Advocate Ravi Kadam along with advocate Pulkit Sharma and a team from Saraf & Partners led by advocate Manmeet Singh appeared for Bank of India.

Advocate Shyam Kapadia appeared for FRL.