Future Lifestyle Fashion to face insolvency resolution process
Another Future Group company – Future Lifestyle Fashion – is now going to undergo the corporate insolvency process after the National Company Law Tribunal allowed the insolvency petition against the company by Bank of India.
Future Lifestyle Fashion (corporate debtor), which owns retail outlets like Central, Brand Factory and Planet Sports, defaulted on a payment of Rs 186 crore due to Bank of India. The NCLT appointed Ravi Sethia as the interim resolution professional.
Bank of India, which is part of a consortium of banks, extended certain credit facilities to the Corporate Debtor for the purpose of its operations, expansion and working capital needs. It granted credit facilities aggregating to Rs. 435 Crores to Future Lifestyle Fashion in 2013 which was last renewed on 16th January 2020. The Corporate Debtor also availed certain long-term loans, shortterm loans etc. from banks and other financial institutions.
After the disbursal of the said loans, Future Lifestyle Fashion first defaulted on its payment obligation on 1st September 2020.
The corporate debtor on 27th September applied for a one-time restructuring of the debt in view of the impact of Covid pandemic on its financial position. The Lenders agreed to this proposal and invoked OTR for their facilities on 2nd November 2020 for the outstanding amount of Rs 360.19 crores. Accordingly, the Corporate Debtor and the Lenders including the Financial Creditor executed the Framework Agreement dated 30th April 2021 for restructuring the outstanding debt. The facilities were also secured by the Personal Guarantee of Kishore Biyani, the promotor of Future Lifestyle Fashion.
The account of Future Lifestyle was classified as Non-Performing Asset (NPA) on 31 March 2021 but as a result of the restructuring, the account was again upgraded to “Standard” on 30th April 2021. Subsequently, the Corporate Debtor’s loan account started running overdue from 29th April 2022 and an Event of Default occurred due to the Corporate Debtor’s failure to comply with the stipulated terms and conditions under the Framework Agreement. The Corporate Debtor’s loan account was downgraded to NPA again on 31 May 2022.
Future Lifestyle was under an obligation to repay other sums totalling to Rs. 178.45 Crores under the Framework Agreement, of which the Corporate Debtor repaid the first two tranches but defaulted in making repayment of the third tranche to the Financial Creditor and other Lenders on 30th June 2022.
Future Lifestyle issued a disclosure dated 1 July 2022 regarding default in payment of the loans and working capital facilities availed from the Financial Creditor and other lenders thus admitting its repayment obligations under the Framework Agreement as on 30th June 2022.
A further Disclosure dated 6th July 2022 was issued by the Corporate Debtor to the Stock Exchanges regarding the said default and the classification of the Corporate Debtor as NPA.
About Future Lifestyle Fashion
Future Lifestyle Fashions is the flagship fashion business of Future Group. It operates more than 300 stores in 90+ cities, occupying 5.7 million sq ft of retail space. It owns and markets brands through in-house retail chains Central and Brand Factory, exclusive brand outlets (EBOs) and other multi-brand outlets (MBOs).
The company had a total turnover of Rs 2,700 crore on a consolidated basis in FY22, and posted a loss of Rs 2,600 crore.
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