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Amazon files plea against Future Retail insolvency

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Forum Gandhi | Mumbai, May 12 | Updated on: May 12, 2022

Amazon has filed an injunction petition against the Future Retail (FRL) insolvency petition filed by Bank of India. The bank had dragged FRL to the NCLT over unpaid dues to the tune of ₹1,441 crore.

Amazon said in its plea that BoI’s petition should not be approved since the bank and FRL are “fraudulently” colluding to derail the US retail major’s arbitration. 

“The petition has been filed fraudulently and maliciously in order to scuttle the arbitration proceedings and consummate the transaction for the sale of retail assets in favour of the Mukesh Dhirubhai Ambani Group,” Amazon said in its petition reviewed by BusinessLine

In August 2020, Future Retail entered into a ₹24,713-crore deal to sell its assets to Ambani-owned Reliance Retail. Amazon dragged Future Group into arbitration for violating a 2019 agreement. It got an interim order in its favour. 

Meanwhile, Reliance Retail had taken repossession of over 947 stores leased to Future Retail.

Last month, lenders to Future Retail disapproved of the deal with Reliance. Due to multiple defaults, the lenders have dragged FRL to the NCLT. The matter was being heard in the insolvency court on May 12 for admission of the petition. 

During the hearing, Amazon’s counsels said that they were opposing the petition under Section 65 of the Indian Bankruptcy Code which caters to “fraudulent or malicious initiation of proceedings.”

Amazon’s counsels said that the lenders to Future Retail failed to take necessary steps to prevent Future Retail from defaulting and alienating its assets. 

Illegal steps

In its petition, Amazon also said that it had a duty to conduct a forensic suit, however, it did not do so. “In fact, the financial creditor with bad faith chose to turn a blind eye towards credible information brought to notice by the applicant with regard illegal steps being taken by FRL in violation of the injunction.”

Hence, it prayed to the Bench to not admit the petition but instead direct the necessary authorities for a forensic audit. 

On the other hand, counsels appearing on behalf of the Bank of India said that since multiple people in the company had resigned, it would be difficult to get the necessary documents. Hence, it prayed to admit the case soon along with approving the interim resolution professional. 

The lenders on behalf of FRL said that they needed time to respond to the petition. However, since the Bench is going on vacation, it posted the matter for June 6.

Published on May 12, 2022

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