Future Retail on Thursday said Bank of India, the lead banker of a consortium of lenders that lent money to it, has moved an insolvency petition against the company in the National Company Law Tribunal (NCLT). The beleaguered retailer is at the centre of an ongoing legal dispute with Amazon over asset sales deal with Reliance Retail.
“Please be informed that Bank of India has served an advance intimation of filing an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the company for default on non-payment of monies due in terms of the Framework Agreement entered into between the Company and Bank of India. We have received a copy of the petition and are in the process of taking legal advice,” Future Retail said in a notification to the exchanges.
According to banking sources, the Future Group’s flagship Future Retail has already slipped into the non-performing asset (NPA) asset bucket in January and the 40% provisions taken against that account will show in banks’ Q4FY22 financial results. Amid the legal battle between the Future Group, Amazon and Reliance Retail, bankers continue to bet on Reliance taking over the Future Group’s assets with the offered amount of over Rs 24,000 crore.
Future Retail’s accounts had been restructured under the resolution framework for Covid-related stress proposed by the Kamath committee. It first failed to repay its dues worth Rs 3,494.56 crore in December 2021 and then to cure the default during the next one month, as required under the terms of restructuring.
In March, lenders to the retailer Future Retail had issued a notice in order to secure their interest in the event of a transfer of assets owned by the company, raising speculation that they might move the debt recovery tribunal (DRT) to recover their dues. Bankers later characterised that action as more of a knee-jerk reaction against Reliance Retail’s move to take over 947 Future Group stores.