Kishore Biyani, renowned as the “Raja of Retail,” is facing the imminent collapse of his once-prosperous retail empire. Future Retail, the flagship company, is teetering on the edge of closure, as recommended by the insolvency professional managing the bankruptcy proceedings. The company has endured a substantial setback, losing crucial locations after being acquired by Reliance Retail.
Following the Committee of Creditors’ rejection of the resolution proposal put forth by Space Mantra, a construction materials platform, Future Retail has officially acknowledged the insolvency professional’s decision to commence the liquidation process. As reported by TOI, the application for liquidation, filed under Section 33 of the Insolvency and Bankruptcy Code, 2016, was submitted to the National Company Law Tribunal (NCLT), Mumbai bench, on November 9.
Space Mantra’s resolution proposal encountered a setback, receiving only 42% support in the vote conducted on September 30. The plan necessitated a minimum of 66% approval from lenders to advance. In adherence to the regulatory guidelines set by the Insolvency and Bankruptcy Board of India (IBBI), the insolvency professional is compelled to initiate the liquidation process based on the voting results.
Reliance Retail, having assumed control of Future Retail’s pivotal locations, possesses approved claims totaling INR 19,400 crore. In contrast, Space Mantra’s bid of INR 550 crore did not receive lender endorsement. Notably, other bidders with binding offers were largely scrap dealers, underscoring the formidable challenges faced by Future Retail in its revival efforts. As the curtains fall on this retail saga, the industry keenly observes the unfolding resolution of this insolvency drama.
FRL received four extensions from the NCLT for the completion of Corporate Insolvency Resolution Process (CIRP), with the final deadline set for September 30, 2023. Subsequently, no further extensions were granted beyond this timeframe.
The tribunal initiated insolvency proceedings against FRL on July 20, 2022.
The Insolvency & Bankruptcy Code (IBC) stipulates that the Corporate Insolvency Resolution Process (CIRP) must be concluded within 330 days, accounting for the time spent in litigation.
In accordance with Section 12 (1) of the Code, the Corporate Insolvency Resolution Process (CIRP) must be finalized within 180 days from the initiation date.
Nevertheless, the NCLT has the authority to provide a one-time extension of 90 days. The total permissible duration for the mandatory completion of the Corporate Insolvency Resolution Process (CIRP), encompassing any extension or litigation period, is capped at 330 days.
Previously, FRL had communicated that it received six bids from potential buyers by the deadline of May 15, the final date for submitting resolution plans.
The cutoff date for the submission of resolution plans, applicable to the 48 companies listed as ‘Eligible Prospective Resolution Applicants,’ was May 15, 2023.
This occurred despite FRL lenders revising their Expressions of Interest (EoIs) and issuing new calls for bids by categorizing their assets into clusters.
Future Retail is undergoing Corporate Insolvency Resolution Process (CIRP) with a debt of approximately INR 30,000 crore.
On March 23, 2023, FRL creditors called for new Expressions of Interest (EoIs), allowing potential buyers to bid for the financially distressed firm either as a going concern, individual clusters, or a combination of asset clusters. This initiative was taken as the company had not attracted a resolution plan for over four months.
In various retail formats encompassing hypermarkets, supermarkets, and home segments, FRL managed brands like Big Bazaar, Easyday, and Foodhall. At its zenith, FRL operated over 1,500 outlets across nearly 430 cities.
As one of the 19 companies within the Future Group engaged in retail, wholesale, logistics, and warehousing, it was slated to be transferred to Reliance Retail as part of a INR 24,713-crore deal declared in August 2020.
Nevertheless, lenders rejected the acquisition of the 19 Future Group companies, including FRL, by Reliance, amidst a legal challenge posed by Amazon.
