Bank of India’s insolvency petition against Future Retail ‘malicious,’ says Amazon

(Representative image. Source: ShutterStock)

US online retailer Amazon on June 20 alleged that Bank of India’s petition to initiate insolvency proceedings against debt-laden Future Retail was ‘malicious.’

At a hearing in the Mumbai bench of the National Company Law Tribunal (NCLT), the counsel for Amazon, Zal Andhyarujina, alleged that lenders to Future Retail, including Bank of India, were colluding with Future Retail.

“This is a malicious intent with which Bank of India has filed the petition,” Andhyarujina argued before the bench, led by Justice Pradeep Narhari Deshmukh. “Our humble submission is for the bench to dispose of this petition and impose a penalty.”

The court adjourned the matter for further hearing to tomorrow.

The background

Bank of India on April 14 filed insolvency proceedings against Future Retail for non-payment of dues. Future Retail owes banks Rs 5,322.32 crore as of March 31, according to Bank of India’s petition in the NCLT. Lenders to the company include Union Bank of India, State Bank of India, Bank of Baroda, and IDBI Bank, among others.

In a stock exchange filing on April 23, Reliance Industries had said the $3.4 billion deal to take over the retail assets of Future Retail could not be implemented because the company's secured creditors had "voted against the scheme.”

While over 75 percent of Future Group's shareholders and unsecured creditors had voted in favour of the deal with Reliance, 69.29 percent of secured creditors rejected the deal and the remaining 30.71 percent voted in favour of it, Future Retail said in an exchange filing on April 22.

In 2019, Amazon invested $200 million in Future Coupons for a 49 percent stake, by virtue of which the US company got a 7.3 percent foothold in Future Retail. Amazon, an investor in Future Group's gift voucher unit Future Coupons, tried to block the deal by obtaining a freeze order from the Singapore arbitration court.

The dispute gradually snowballed into a slew of cases across multiple Indian courts.

Even as a final order in the case was pending, Reliance started taking over the assets of Future Retail. Future was unable to make lease payments for some of its outlets. Reliance bailed out Future Retail by transferring the leases of some stores to its name and subletting them to the group to operate.

Amazon’s lawyers have alleged that despite knowledge back then, the lenders did not do anything about it.

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