The resolution professional (RP) of Future Retail (FRL) has sought initiation of liquidity proceedings of Future Retail (FRL), after the plan submitted by SpaceMantra was rejected by the Committee of Creditors (CoC). SpaceMantra, a provider of an online marketplace for the construction and interior industry, was the only bidder for FRL through the insolvency process.
The RP has filed an application before the National Company Law Tribunal, Mumbai Bench, on Thursday, for initiation of liquidation of FRL under Section 33 of the Insolvency and Bankruptcy Code (IBC), FRL said in a regulatory update.
Section 33 of IBC states that the CoC may decide to liquidate the corporate debtor at any time after its constitution and before the confirmation of the resolution plan. This includes any time before the preparation of the information memorandum.
On October 2, FRL’s CoC had rejected a bid submitted by Space Mantra after it failed to get the requisite number of votes in the latter’s favour through an e-voting process. The e-voting ended on September 30. Bank of New York Mellon has the highest voting share of 21.18% in FRL’s CoC, followed by Union Bank of India at 9.17% and Bank of Baroda at 8.95%.
Under the Corporate Insolvency Resolution Process (CIRP), the next stage after the rejection would be the liquidation of the firm as there are no other bidders. This would mean selling the firm at “scrap” value, sources had earlier told FE.
SpaceMantra had offered about `550 crore through the bidding process, which many lenders believe was a “fair price” as it was close to the fair value of Rs 450 crore arrived at independent valuers, sources said.
Later in October, US-based technology consulting firm Palguntech had asked FRL’s CoC to consider its bid placed earlier in May. The company had also stated that its bid should be considered to avoid liquidation of FRL as there are no other bidders for the entire assets of FRL.
SpaceMantra and certain other lenders had also sought a relook at the bidding process and extended the deadline further to avoid liquidation.
In July 2022, the National Company Law Tribunal (NCLT) admitted an insolvency petition filed by the Bank of India against Future Retail and appointed Vijay Kumar V Iyer as resolution professional, paving the way for the bankruptcy proceedings of the debt-laden retailer.
In 2020, Future Group had signed a deal to sell its retail, logistics and warehousing businesses to Reliance Retail, a subsidiary of billionaire Mukesh Ambani-controlled Reliance Industries Ltd (RIL) for Rs 24,713 crore.
However, the deal got entangled in legal tussles after the US e-commerce major Amazon opposed the scheme, citing the 2019 agreement it had entered into with Future Group. Amazon, which had acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, for about Rs 1,500 crore, alleged violation of certain terms in the deal signed in 2019.
Later, RIL expressed its inability to acquire Future Group’s businesses, as secured creditors of FRL have voted against the scheme.