The National Company Law Tribunal (NCLT), Mumbai Bench on Wednesday ordered for the initiation of the Corporate Insolvency Resolution Process (CIRP) against Future Retail, and appointed an Insolvency Resolution Professional (IRP). (Bank of India v. Future Retail Limited)
While doing so, the Bench of Justice PN Deshmukh and Shyam Babu Gautam (Technical Member) rejected an intervention application filed by Amazon challenging the insolvency proceedings.
Future Retail Limited (FRL) entered into a framework agreement with Bank of India for availing credit facility from a consortium of lenders including Axis Bank and Andhra Bank.
Subsequently, FRL failed to honour the agreement, resulting in Bank of India filing a CIRP application under Section 7 of the Insolvency Bankruptcy Code, 2016 (IBC).
While the matter was pending, Amazon filed an intervention application (IA) under Section 65 of the IBC (fraudulent or malicious intent of proceedings) challenging the insolvency proceedings on the ground that FRL was barred from disposing of or creating encumbrance on its assets or issuing any securities to secure any funding from a restricted party, as per the terms of Singapore Emergency Arbitrator’s award passed in 2020.
The IA thereby challenged the framework agreement entered into between Bank of India and FRL.
The interest of Amazon in FRL arises from the e-commerce giant’s investment of ₹1,500 crore in Future Coupons, thereby acquiring 49% stake. Future Coupons is promoter of Future Group and holds 9.82% stake in its retail segment. The deal resulted in Amazon holding 4.81% stake in FRL.
The insolvency proceedings against FRL are in the backdrop of the failed deal between Reliance and FRL worth ₹24,713, crore which was opposed by secured creditors including Amazon.
Amazon, in furtherance of its opposition, secured the Emergency Arbitrator order from the Singapore International Arbitration Centre (SIAC) in its favour and filed an IA in the matter.
Senior Advocate Zal Andhyarujina along with Senior Advocate Rajiv Nayyar appeared on behalf of Amazon. They were instructed by a team from P&A Law Offices comprising Anand S Pathak, Amit Mishra, Shashank Gupta, Vijay Purohit, Sreemoyee Deb, Mohit Singh, Devna Arora, Anubhuti Mishra, Samridhi Hota, Shivam Pandey, Nikita Bangera, Pratik Jhaveri, Faizan Mithaiwala and Didon Misri, and a team from AZB & Partners led by VP Singh.
Senior Advocate Ravi Kadam along with Advocate Pulkit Sharma and a team from Saraf & Partners led by Manmeet Singh appeared for Bank of India. Advocate Shyam Kapadia appeared for FRL.