Future Retail Heads For Liquidation More Than A Year After Reliance Took Control Of Future Retail Stores

Future Retail Ltd (FRL) resolution professional has filed for liquidation, marking a sad end for the company that once led India's retail revolution. In an exchange filing on Friday, the company said, "the Resolution Professional ("RP") has filed an application, before the Hon'ble National Company Law Tribunal, Mumbai Bench, for initiation of liquidation of FRL under Section 33 of the Insolvency and Bankruptcy Code, 2016 on 9 November 2023."

In a separate exchange filing the company also said that the resolution plan submitted by Space Mantra Private Limited has not been approved by the Committee of Creditors of Future Retail Limited ("FRL").

Earlier, on September 30, the company said that pursuant to the approval obtained from the Committee of Creditors meeting held on September 04, 2023, the Resolution Professional of Future Retail Limited filed an application before the Hon'ble National Company Law Tribunal (NCLT), Mumbai for exclusion of a period of 15 days from corporate insolvency resolution process (CIRP) of FRL, and consequent change in last date of CIRP from September 15, 2023 to September 30, 2023.

According to Section 33 of the Insolvency and Bankruptcy Code (IBC), the Committee of Creditors (CoC) may decide to liquidate the corporate debtor at any time after its formation and prior to the confirmation of the resolution plan.

SpaceMantra, an online marketplace provider for the construction and interior industry, was reportedly the highest bidder for FRL as it had placed a bid of Rs 550 crore via the insolvency process. However, Space Mantra's plan was dismissed in the vote on September 30, as it received only 42% support.

Meanwhile, other five companies that placed their bids included Pinnacle Air, Palgun Tech LLC, Lehar Solutions, Goodwill Furniture and Sarvabhishta E-waste Management.

On March 23 this year, the company's creditors invited new Expressions of Interest (EoIs) whereby prospective buyers were allowed to bid for the debt-ridden company "as a going concern or individual cluster or a combination of clusters of its assets" after it failed to get a resolution plan in over four months.

In April last year, the State-owned Bank of India initiated insolvency proceedings against FRL for non-payment of dues.

In July 2022, the NCLT admitted an insolvency petition filed by the BoI against Future Retail. Vijay Kumar V Iyer was appointed as the resolution professional, who started the bankruptcy proceedings of the debt-laden retailer.
Future Retail has a debt of around Rs 30,000 crore and the company is going through CIRP.

One must note that FRL was part of the 19 Future group companies operating in the retail, wholesale, logistic, and warehousing segments, that were supposed to be transferred to Mukesh Ambani's Reliance Retail as part of a Rs 24,713-crore deal with the Future group in August 2020.

However, lenders had rejected the acquisition of the 19 Future group companies, including FRL, by Reliance amidst a legal challenge by Jeff Bezos' Amazon. In Feb last year, Reliance took control of Future Retail stores, including Big Bazaar.