Resolution Professional TO NCLT: Future Retail directors cost creditors Rs 14,809 cr in losses.
Debt-ridden Future Retail Ltd, which is facing insolvency proceedings, on Friday said its resolution professional has filed an application before the National Company Law Tribunal against the former and present directors of the company for causing a loss of Rs 14,809.44 crore to creditors.
In the application filed before the Mumbai bench of the NCLT, the Resolution Professional (RP) has sought direction from the tribunal against the present and erstwhile directors of FRL “to contribute the amount to the company”, Future Retail Ltd (FRL) said in a regulatory filing.
“As on the date of filing of the said application, basis the limited information available, the RP has quantified the potential loss that has been caused to the creditors of FRL to be Rs 14,809.44 crore, and has sought a direction against the respondents to the said application to contribute the such amount to FRL,” the company added.
The RP of FRL has filed an application before the NCLT Mumbai against directors/ erstwhile directors of the company under the Insolvency & Bankruptcy Code 2016, it said. FRL was dragged into insolvency proceedings by its lender Bank of India after it defaulted on loans. The Mumbai bench of the National Company Law Tribunal on July 2022 directed to initiate insolvency against FRL. In January, its promoter Kishore Biyani stepped down from the suspended board of FRL and resigned as Chairman and director of the company.
Last year in August, stock market regulator Sebi ordered a forensic audit of the accounts of FRL for the financial years 2019-20, 2020-21 and 2021-22.
The Securities and Exchange Board of India (Sebi) has also asked for an audit of FRL’s Related Party Transactions (RPT) with three other Future group firms — Future Enterprises Ltd, Future Consumer Ltd and Future Supply Chain Solutions Ltd.
RPT refers to a deal or arrangement made between two parties related to each other by having a pre-existing business relation or common interest.
FRL was part of the 19 Future group companies operating in the retail, wholesale, logistic and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a Rs 24,713-crore deal announced in August 2020.
However, lenders had rejected a Rs 24,713-crore takeover of the 19 Future group companies, including FRL, by Reliance amid a legal challenge by Amazon.
13 companies — including Reliance Retail, Adani Group’s JV April Moon Retail and 11 other firms — have made it to the final list of prospective bidders for acquiring FRL. However, last month FRL informed that the last date for submission of bids (resolution plans) for the company was February 20, 2023, and it still has not received any offer.
“On 20 February 2023, no resolution plans were received by RP,” it said, adding a further course of action shall be decided by the Committee of Creditors soon.