The National Company Law Tribunal (NCLT) on Thursday admitted Future Lifestyle Fashions for a corporate insolvency resolution process under India’s insolvency code.
The tribunal appointed Ravi Sethia as the interim resolution professional to take over the management of the company. State-owned Bank of India, the lead financial creditor had moved the NCLT under the Insolvency and Bankruptcy Code after the company defaulted on payments.
A bench led by Justices Shyam Babu Gautam and Kuldip Kumar Kareer admitted the insolvency petition and said that the financial creditor has successfully demonstrated and proved the debt and default in this case.
“It is noted that the corporate debtor admits the said outstanding debt. Therefore, this bench is of the view that this petition satisfies all the necessary requirements for admission under Section 7 of the Code. Accordingly, the petition is admitted,” the bench said.
In its petition, Bank of India had stated that Future Lifestyle failed to make payments of ₹185 crore, including interest till August 2022, forming a part of its financial debt.
The lender had granted credit facilities of ₹435 crore to the company in 2013 which were then renewed in January 2020.
Additionally, the company also availed of certain long-term and short-term loans from banks and other financial institutions.
In September 2020, the company, in a letter to the creditors, had applied for restructuring of its loans in view of the impact of the covid-19 pandemic on its finances. Agreeing to the proposal, lenders had invoked a one-time restructuring of its dues of ₹360.19 crore under a Reserve Bank of India (RBI) circular on 2 November 2020.
Accordingly, Future Lifestyle and its lenders, including Bank of India, executed an agreement on 30 April 2021 for restructuring the debt. More importantly, Future Group founder Kishore Biyani had extended personal guarantees on those loans.