A bankruptcy court, on May 12, further delayed the initiation of insolvency proceedings against Future Retail as the company sought more time to respond to a petition by Bank of India that seeks to recover dues from the debt-laden retailer.
In legal proceedings, a written reply is the party’s response to a defendant's allegation or counterclaim. In India, courts typically look at submissions from both parties before passing a judgment or an order.
At the hearing today in the Mumbai bench of the National Company Law Tribunal (NCLT), the counsel representing Future Retail, Shyam Kapadia, said that some of the company’s directors’ term has expired, which is why there was a delay in filing a response to the petition.
Kapadia said that there was “no urgency” in the case for which “the right to file a reply” should be taken away. “Nothing significant will happen in one week,” and there was “no merit in “bulldozing the case,” he added.
The counsel was responding to arguments presented by Bank of India’s counsel, Ravi Kadam. Kadam argued that the bank was not concerned with any third-party dispute in the company and urged the bench that it was essential that an interim resolution professional takes control of Future Retail given the “urgency of the matter.”
Kadam said that the existence of debt and default are admitted by the company and its auditors have certified it. Hence, it is a “clear-cut case for admission,” Kadam added.
This is the second time that the court has given time to Future Retail to respond to Bank of India’s petition. It had, on April 28, given time to the company to file a reply. The court will now hear the case next on June 6.
Bank of India on April 14 had 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 National Company Law Tribunal (NCLT), a lawyer said. Lenders to the company include Union Bank of India, State Bank of India, Bank of Baroda, and IDBI Bank, among others.
In 2019, Reliance Industries announced a $3.4 billion deal to acquire the Kishore Biyani-backed company’s retail, logistics, and warehouse assets. However, this escalated into a legal battle with US retailer Amazon, a stakeholder in Future Coupons, who opposed the deal.
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.
To add to lenders’ legal woes, Amazon has now moved a so-called intervention application in Future Retail’s insolvency case. Any third party can file an intervention application to interrupt the proceedings of a case and claim a right to a hearing in the interest of justice.Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.