Reliance Retail to acquire insolvent Future Supply Chain for Rs 171 crore

The National Company Law Tribunal (NCLT), Mumbai Bench, has approved Reliance Retail Ventures Limited (RRVL) as the successful bidder for Future Supply Chain Solutions Limited (FSCSL), with a resolution plan amounting to approximately Rs 171.39 crore. This order brings to a close a corporate insolvency resolution process (CIRP) that lasted over two and a half years.

The insolvency of Future Supply Chain Solutions was initiated on January 5, 2023, following an application filed by operational creditor DHL Ecommerce (India) Private Limited. Rajan Rawat was appointed as the Interim Resolution Professional, who later continued as the Resolution Professional (RP).

FSCSL was admitted into CIRP with admitted financial claims of approximately ₹1,551.67 crores from a consortium of creditors. The Committee of Creditors (CoC) was led by Azim Premji Trust.

The resolution process witnessed a challenging journey. An initial round of inviting Expression of Interest (EoI) in March 2023 failed, but a second round ultimately saw Reliance Retail emerge as the sole viable applicant. The CoC approved RRVL’s resolution plan with an overwhelming majority of 91.76% voting share.

The approved plan offers a realizable amount for creditors that is 128.52% of the average liquidation value of Rs 133 crore, ensuring a better recovery than if the company had been liquidated. Financial creditors are set to receive approximately 28.83% of their admitted claims or Rs 158 crore.

Payouts to operational creditors vary. Government dues will see a 20.84% recovery, workmen’s dues will be paid in full at 28.83%, while other operational creditors will receive a minimal 0.085%. A secured operational creditor, MADC, is slated to receive ₹4 crore, a 23.06% recovery.

The NCLT bench, after seeking and receiving clarifications on certain plan conditions, emphasized that the commercial wisdom of the CoC is paramount. With the NCLT’s approval, the existing board of FSCSL stands suspended and will be replaced by a Monitoring Committee to oversee the plan’s implementation.

As a subsidiary of Reliance Industries Limited, the Reliance Retail Ventures is an integral part of Reliance Industries Group.  The Reliance Retail stands as India’s largest fashion and lifestyle retailer, employing a multi-format strategy to cater to wide-range of customer segments, through various retail concepts that cater to customer segments from value-oriented to premium and luxury. Also, the successful resolution applicant had been in the business of providing warehousing services to third parties all across the territory of India.

Also See: Reliance Retail among seven others in race for Future Supply Chain Solutions