InGovern, a corporate governance advisory firm, has sought the insolvency board’s urgent intervention against alleged inaction of Future Retail’s (FRL) resolution professional (RP) in recovering the debt-laden company’s assets.
FRL owes its creditors, including the largest public sector banks in India, more than Rs 17,000 crore which are in danger of being written off. This is because the firm’s substantial assets have been frittered away at the anvil of the commencement of the resolution process, InGovern said in a letter to the chairperson of the Insolvency and Bankruptcy Board of India.
This is a deep concern to the relevant stakeholders of FRL, including the creditor banks, shareholders, vendors and the Indian public at large, it added.
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Accusing of the resolution professional Vijaykumar Iyer of “complete inaction”, InGovern wants the board to direct him to take appropriate action under the Insolvency and Bankruptcy Code (IBC).
In its letter, InGovern stated disclosures made by FRL in February-March this year, including shutting down of 835 retail stores due to strained cashflows and inability to pay rentals. These stores also account for about 55-65% of FRL’s revenues.
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Alleging that such arrangements were never disclosed to stock exchanges and shareholders at relevant times, the proxy advisory firm stated that such arrangements were only entered with one party, the Reliance group.
The letter also said Reliance Industries
RL is undergoing corporate insolvency resolution process vide an order dated July 20, 2022, passed by the National Company Law Tribunal’s Mumbai bench. The tribunal had also appointed Iyer as the resolution professional for FRL.
The advisory firm had earlier moved regulators, including Sebi seeking action against the resolution professional.