Amazon appeals not to admit bankruptcy proceedings against Future Retail
US e-commerce giant Amazon has filed an interlocutory motion with the National Company Law Tribunal (NCLT), asking it not to admit the insolvency petition filed against indebted Future Retail (FRL).
Previously, Bank of India (BoI) moved the bench in the Mumbai Bankruptcy Court seeking to initiate resolution process against FRL, while New Delhi-based Foresight Innovations filed a similar petition against Future Enterprises (FEL), another group entity.
The NCLT Mumbai bench, which is hearing the insolvency petition filed by BoI, will hear arguments from Amazon on its next date on June 6. On Thursday, the NCLT asked FRL to file its response to BoI’s insolvency petition, before the next court date.
Amazon opposes the opening of insolvency proceedings, alleging that the banks colluded with FRL and that bankruptcy proceedings at this stage would compromise the rights of the e-commerce company. The US company moved the application under Section 65 of the Insolvency and Bankruptcy Code (IBC), which deals with penalty provisions for the fraudulent or malicious commencement of proceedings.
Amazon will not join the insolvency petition. The US retailer had filed the motion for interim relief two days ago, Amazon court Arun Kathpalia informed.
Alleging the banks colluded with the FRL with “bad faith” intentions, Amazon in its motion said it was primarily to disenfranchise the US company, attorneys briefed on the matter told FE. ‘affair.
On Tuesday, the online retail giant moved the RBI, reiterating its earlier call for a ‘forensic investigation’ into FRL’s alleged misconduct. In its letter to RBI, Amazon said the banks, which must ensure fiduciary duty to the public, acted in a “completely irresponsible” and “collusive” manner. This is despite financial lenders being aware of FRL’s illegal actions, he alleged.
The insolvency petition was “deliberately” filed by FRL together with the lenders and such actions should not be allowed. Furthermore, if insolvency proceedings against FRL are allowed, there would be no “liability” for FRL’s assets, he added.
BoI, which has an exposure of Rs 1,441.62 crore to FRL led by Kishore Biyani, had moved NCLT in mid-April to collect the debt. The lender has also requested the appointment of Vijaykumar Iyer, a partner at Deloitte, as an insolvency practitioner. BoI is represented by lead attorney Ravi Kadam.
The banks’ total exposure to the FRL is estimated to be around Rs 17,000 crore and the figure could rise to Rs 25,000 crore if defaults continue, some of its creditors said in court.
The BoI is also the main lender to the consortium of 27 financial institutions which includes State Bank of India, Axis Bank, Corporation Bank, IDBI Bank, Bank of Baroda and Punjab National Bank among others.
In 2020, Future Group had signed an agreement to sell its retail, logistics and warehousing business to Reliance Retail, a subsidiary of billionaire Mukesh Ambani controlled Reliance Industries Ltd (RIL) for Rs 24,713 crore.
However, the deal became entangled in legal wrangling after US e-commerce giant Amazon objected to the scheme, citing the 2019 deal it struck with Future Group. Amazon, which acquired a 49% stake in Future Coupons, the promoting entity of Future Retail, for around Rs 1,500 crore, alleged breach of certain terms of the agreement signed in 2019. RIL later rescinded the deal after Future Group failed to secure shareholders’ and lenders’ approval.