US e-commerce major Amazon has filed an interlocutory application before the National Company Law Tribunal (NCLT), asking it not to admit the insolvency petition filed against debt-laden Future Retail (FRL).
Earlier, Bank of India (BoI) had moved the bankruptcy court’s Mumbai bench seeking to initiate a resolution process against FRL, while New Delhi-based Foresight Innovations had filed a similar petition against Future Enterprises (FEL), another group entity.
NCLT Mumbai bench, which is hearing the insolvency petition filed by BoI, will hear Amazon’s arguments at its next date on June 6. On Thursday, the NCLT asked FRL to file its reply to BoI’s insolvency petition, before the next hearing date.
Amazon is opposing initiation of insolvency proceedings, alleging the banks had colluded with FRL and that bankruptcy proceedings at this stage will compromise the e-commerce firm’s rights. The US firm has moved the application under Section 65 of the Insolvency and Bankruptcy Code (IBC), which deals with provisions relating to penalty for fraudulent or malicious initiation of proceedings.
Amazon will not join the insolvency petition. The US retailer had filed the interlocutory application two days ago, Amazon counsel Arun Kathpalia informed the court.
Alleging that the banks have colluded with FRL with “mala fide” intentions, Amazon, in its petition said this was primarily to deny the US company its rights, lawyers informed of the case told FE.
On Tuesday, the online retail giant moved the RBI, reiterating its earlier demand for a “forensic investigation” into FRL’s alleged misconduct. In its letter to RBI, Amazon has stated that banks, who have to ensure compliance of fiduciary duty towards the public, have acted in a “completely irresponsible” and “collusive manner”. This is despite, the financial lenders being in the know of FRL’s illegal actions, it alleged.
The insolvency petition was “purposefully” filed by FRL jointly with the lenders and such actions should not to be allowed. Further, if the insolvency procedures against FRL are allowed, there would not be any “accountability” for FRL’s assets, it said.
BoI, which has an exposure of Rs 1,441.62 crore to the Kishore Biyani-led FRL, had moved NCLT in mid-April to recover the debt. The lender has also sought appointment of Vijaykumar Iyer, Partner at Deloitte, as the insolvency professional. BoI is being represented by Senior counsel Ravi Kadam.
The total exposure of banks to FRL is estimated to be at about Rs 17,000 crore and the figure could climb to as high as Rs 25,000 crore if debt defaults continue, some of its creditors had earlier said in the court.
BoI is also the lead lender in the consortium of 27 financial institutions that 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 a deal to sell its retail, logistics and warehousing businesses to Reliance Retail, a subsidiary of billionaire Mukesh Ambani-controlled Reliance Industries Ltd (RIL) for Rs 24,713 crore.
However, the deal got entangled in legal tussles after the US e-commerce major Amazon opposed the scheme, citing the 2019 agreement it had entered into with Future Group. Amazon, which acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, for about Rs 1,500 crore, alleged violation of certain terms in the deal signed in 2019. Later, RIL cancelled the deal after Future Group failed to secure shareholders’ and lenders’ approval.
