Source – legaleraonline.com
Future Retail Ltd, once a pioneer in India’s organized retail sector, faces liquidation as ordered by the National Company Law Tribunal (NCLT) on Monday. This decision marks the end of Kishore Biyani-led Future Retail, initiating a process to sell its assets to repay debts.
Liquidation Ordered by NCLT
The NCLT’s decision followed the failure to secure any resolution applicants to revive the insolvent company. A bench led by Justice Kuldip Kumar Kareer stated, “It is evident that the maximum period of the CIRP (corporate resolution insolvency process) has expired and no resolution plan has been approved by the CoC. We are of the considered opinion that this is a fit case for liquidation.” Sanjay Gupta has been appointed as the liquidator for the case.
In November 2023, the resolution professional filed an application with the Mumbai bench of the NCLT, seeking the liquidation of Future Retail, based on a resolution by the Committee of Creditors in October. The Committee of Creditors, led by Bank of India, initiated insolvency proceedings against the company in April 2022 after it failed to repay its lenders. The retail firm owes more than ₹17,000 crore to both financial and operational creditors.
Implications for Creditors and Industry
Legal experts view this as a significant blow to the company’s lenders. Tushar Kumar, an independent counsel at the Supreme Court, highlighted the broader impact: “The liquidation of Future Retail by the NCLT represents a critical enforcement of insolvency laws, underscoring the tribunal’s role in addressing corporate financial distress. This move disrupts the retail industry by terminating the company’s operations, affecting supply chains and employment, while enabling creditors to reclaim assets through a structured liquidation process.”
Alay Razvi, partner at Accord Juris, noted the ripple effects across the retail industry: “This decision will surely disrupt the industry and partnerships. The inability to recover such a large amount will inevitably impact the balance sheets of many creditors involved. This decision may give rise to stricter norms and regulations and, more importantly, reassess their financial strategies.”
Failed Revival Attempts and Final Liquidation
Despite initial interest from 49 players, including Reliance Retail, Jindal Power Ltd., and the Adani group, none submitted final resolution plans. Space Mantra, which was not part of the initial list of bidders, ended up as the sole resolution applicant with a ₹550 crore bid. However, its plan was rejected by lenders, leading to the liquidation request.
Before its financial troubles, Future Retail operated popular chains like Big Bazaar, Foodhall, fbb, Easyday, and Heritage, with 1,308 stores in 397 cities as of March 31, 2021. Financial difficulties began in 2008 due to excessive debt, exacerbated by the pandemic in 2020. The group’s slump sale of assets to Reliance Retail in 2020 was challenged by Amazon, stalling the process. In 2022, Reliance Retail eventually took control of over 800 stores of Future Retail.
This liquidation order represents a significant chapter in the evolving landscape of India’s retail industry, highlighting the challenges and complexities faced by companies in financial distress.
