Bank of India transfers NCLT as lead lender to Future Retail led by Kishore Biyani


In a first such move, public sector lender Bank of India (BoI) sued Future Retail Ltd (FRL), headed by Kishore Biyani, in the National Company Law Tribunal (NCLT) for initiating proceedings for resolution under the Insolvency and Bankruptcy Code.

Mumbai-based BoI – the lead bank for Future Retail’s consortium of lenders – moved NCLT in a bid to settle the debt. The banks’ total exposure is estimated at around Rs 17,000 crore.

While BoI’s loan exposure to Future Retail is Rs 1,441.62 crore, other members of the lender consortium include Axis Bank, Andhra Bank, State Bank of India, Corporation Bank, IDBI Bank, Union Bank of India, Bank of Baroda, Central Bank of India, National Bank of Punjab and Vijaya Bank.

BoI suggested that the insolvency court appoint Vijay Kumar V Iyer as the company’s interim professional.

Under the Rs 24,713 crore deal announced by the Future Group in August 2020, FRL is to sell 19 companies operating in the retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL).

Referring to the BoI’s latest decision, bankers said there is an option to consider liquidation action in the future if resolution efforts fail. The consortium decided that the main lender would file an application with the IBC.

According to documents filed by Future Retail on the BSE, the BoI gave advance notice of the filing of a 2016 IBC Section 7 claim against the company. This is a failure to pay amounts due under the framework agreement concluded between the two parties.

“We have received a copy of the petition and are in the process of taking legal advice,” FRL said. The application is expected to be presented before the Mumbai bench of the NCLT. No date has been notified for the same.

Lenders are also seeking to approach the Debt Recovery Tribunal (DRT) to secure the interest of lenders and protect the value of assets. Banks are already treating FRL exposure as a non-performing asset and have started to build provisions for this.

Earlier this month, Bank of India’s lawyer told the Supreme Court that he wanted to withdraw his request to intervene. The college of three judges allowed the bank’s request to be withdrawn.

BoI’s attorney had informed the court that he was considering other options.

In February, Future Retail had asked the Supreme Court for two weeks to find a solution with the lenders on the issue of compensation fees and avoid being labeled a non-performing asset (NPA). The lenders’ lawyer had suggested an open offer between Amazon and RIL to settle the dispute and secure collection from the banks.

Several Future Group companies, including FRL, had entered into agreements with their respective lenders under the terms of the RBI circular dated August 6, 2020, in which a Covid stress resolution framework was announced.

The future group companies will hold meetings of their respective shareholders and creditors between April 20 and 23 to secure their approval for the Rs 24,713 crore deal. The deal is being challenged by Amazon and is the subject of litigation in various forums, including the Supreme Court, the Delhi High Court and the Singapore International Arbitration Center.

Earlier this week, Amazon warned FRL against holding shareholder and creditor meetings to approve the sale of its retail assets to Reliance Retail.

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