Resolution professional detects Rs 15,000 cr fraudulent transactions in Future Retail

The resolution professional of Future Retail – Vijay Kumar V Iyer– has informed the exchanges that he has detected Rs 14,809 crore loss to the company due to fraudulent transactions made by erstwhile directors of the company.

The RP has informed that he has filed an application before the NCLT against the said directors under Section 66(2) and Section 67 read with Section 60(5) of the Insolvency & Bankruptcy Code 2016, and has sought direction from the tribunal against the directors.

Section 66 deals with fraudulent transactions undertaken by the promoters/directors of a corporate debtor with the intent to defraud the creditors, while and Section 67 deals with the proceedings under law against such transactions.

If the adjudication authority finds merit in such allegations, and the RP provides sufficient proofs of such allegations, then the NCLT may order claw back of the amount involved.

The Mumbai bench of the National Company Law Tribunal (NCLT) on 20 June 2022 admitted Bank of India’s plea to initiate corporate insolvency resolution process (CIRP) against Future Retail for defaulting on a payment of Rs 856 crore. 

It must be mentioned here that proxy advisory firm Ingovern Research Services had written a letter to Securities and Exchange Board of India (Sebi) bringing to its attention, what it says, the complete inaction by the Resolution Professional of Future Retail Ltd (FRL) to safeguard the company’s assets of FRL for the benefit of the creditors and public shareholders.

Ingovern Research, in its letter to the capital market regulator, has pointed out that Rs 17,000 crore that Future Retail owes to creditors is at the danger of being written off as the substantial assets of the company have been frittered away just at the anvil of the commencement of FRL’s bankruptcy process.

Future Retail owes Rs 19,000 crore to banks to financial institutions with over Rs 4,000 crore dues to Bank of New York Mellon.

Meanwhile in an earlier filing with the exchanges, RP Vijay Kumar V Iyer has informed that he has received no resolution plans for Future Retail till the last date for submission of resolution plans on 20 February 2023.

Many big names including Reliance Retail Ventures Ltd and Adani Group had shown interest in taking over the assets of Future Retail through the ongoing corporate insolvency resolution process.

Also See: Resolution professional has failed to safeguard assets of Future Retail, claims proxy advisory firm