Debt-ridden Future Retail Ltd., which is going through bankruptcy proceedings, announced on Friday that its Resolution Professional had filed an application before the National Company Law Tribunal (NCLT) against the company’s previous and current directors for creating a loss of 14,809.44 crore to creditors. Future Retail Ltd (FRL) stated in a regulatory filing that the Resolution Professional (RP), in the application submitted before the Mumbai bench of the NCLT, has requested a directive from the tribunal against the current and former directors of FRL to contribute the money to the business.
The company stated as quoted by PTI, “As on the date of filing of the said application, based on the limited information available, the RP has quantified the potential loss that has been caused to the creditors of FRL to be 14,809.44 crore, and has sought a direction against the respondents to the said application to contribute such amount to FRL.
It stated that RP had submitted an application under the 2016 Insolvency & Bankruptcy Code to the NCLT Mumbai against current and former directors of the firm.
Following debt defaults, Future Retail was forced into insolvency proceedings by its lender, Bank of India. On July 20, 2022, the Bombay branch of the National Company Law Tribunal ordered that FRL be declared insolvent. Kishore Biyani, the company’s promoter, resigned as the company’s chairman and a director in January. He also left the suspended FRL board. The stock market watchdog Sebi demanded a forensic investigation of FRL’s financial records for the fiscal years 2019–20, 2020–21, and 2021–22 last August. A review of FRL’s Related Party Transactions (RPT) with Future Enterprises Ltd, Future Consumer Ltd, and Future Supply Chain Solutions Ltd has also been requested by the regulator.
According to PTI, RPT refers to a transaction or arrangement reached between two parties who are connected to one another through an earlier commercial connection or shared interest. FRL was one of 19 Future group firms that were to be transferred to Reliance Retail as part of a deal worth $24,713 billion that was announced in August 2020. These companies operated in the retail, wholesale, logistic, and warehousing sectors. Despite Amazon’s legal appeal, lenders had turned down Reliance’s offer to buy out the 19 Future group companies, including FRL, for $24.713 billion.
The final list of potential bids for the acquisition of FRL includes a total of 13 businesses, including Reliance Retail, April Moon Retail, a JV of the Adani Group, and 11 other businesses. The company’s last day to submit bids (resolution plans), according to FRL, was February 20, 2023, however as of this month, no offers have been made.