Future Retail’s share price surged by 4 percent on March 16 after the company’s Executive Chairman and Director Kishore Biyani withdrew his resignation, which he had submitted on January 23. The withdrawal came after the company stated that the resolution professional had objected to the contents of Biyani’s resignation letter and requested him to withdraw it.
Future Retail, which is currently undergoing insolvency proceedings, has been embroiled in a legal battle over the past few months. Last week, the resolution professional filed an application against former and present directors of Future Retail in the NCLT (National Company Law Tribunal), alleging that they had caused a massive loss to creditors and calling for them to contribute an amount of Rs 14,809 crore to be paid back to creditors.
The Securities and Exchange Board of India (SEBI) also ordered a forensic audit of Future Retail’s accounts from FY20, FY21, and FY22 last year. Future Retail Group has been undergoing insolvency proceedings since July last year, when the Bank of India filed an insolvency petition with the NCLT. As of February 2023, around Rs 21,000 crore had been claimed by 34 financial creditors.
Investment advisory firm InGovern has also accused the promoters and directors of Future Retail of fraudulent transactions and mismanagement of funds. The advisory firm had criticized Biyani’s resignation, stating that he was abdicating all responsibility for helping the company recover assets or ensuring that there was any continued value for sale to investors. According to media reports, the resolution professional also plans to approach the NCLT due to the non-cooperation of the Biyanis.
The current scenario makes it imperative for SEBI and the Reserve Bank of India (RBI) to intervene to protect shareholder wealth and ensure that it can be salvaged. The withdrawal of Biyani’s resignation has brought some relief to the beleaguered company, but the road to recovery is still long and arduous. The company will need to navigate through the legal hurdles and work towards regaining the trust of its creditors and investors to emerge from the insolvency proceedings.