Bank of India moves NCLT against Future Lifestyle Fashions, files insolvency plea

New Delhi: Public sector lender Bank of India has filed a petition before the National Company Law Tribunal (NCLT), to initiate insolvency proceedings against debt-ridden Future Lifestyle Fashions Ltd (FLFL).

A copy of the petition filed before the NCLT, under Section 7 of the Insolvency and Bankruptcy Code, has been served by the advocate on behalf of Bank of India, FLFL said in a regulatory filing on Monday.

"The company is in the process of taking legal advice in the above matter," said FLFL.

Besides this, FLFL is already facing two other insolvency petitions. The first one is filed by its financial creditor Catalyst Trusteeship Ltd, claiming default of an amount of Rs 451.98 crore under section 7 of IBC.

The second petition was filed by an operational creditor Lotus Lifespaces LLP, which has moved under section 9, claiming default of Rs 150.37 crore.

Under section 7 of the IBC, the financial creditor of the company, which includes banks and financial institutions, can file a plea before the NCLT to initiate a corporate insolvency resolution process (CIRP) claiming a default.

While section 9 of the IBC empowers an operational creditor to file an insolvency plea in case of a default. Operational creditors are those whose debt is owed on account of dues arising out of business transactions.

The petition by Catalyst Trusteeship is scheduled for hearing on Tuesday at NCLT and Lotus Lifespaces' petition on September 26, the filing said.

The NCLT has already initiated CIRP against the Kishore Biyani-led Future Group's flagship firm Future Retail Ltd after admitting the plea by the Bank of India.

FLFL has in-house retail chains Central and Brand Factory, exclusive brand outlets (EBOs) and other multi-brand outlets (MBOs) of nearly a dozen apparel labels including -  Lee Cooper, Champion, aLL, Indigo Nation, Giovani, John Miller, Scullers, Converse and Urbana in its portfolio.

In the said filing FLFL said as part of the business revival, the board has already initiated the "monetisation of identified assets", subject to requisite approvals from lenders.

"The company is also in discussion with lending banks for its proposal for restructuring of financial debt and would be submitting the same in due course of time after getting approval from the Board. In this situation, the Banks would have an option to evaluate and consider the said proposal," it said.

Last week, FLFL while declaring its results for the April-June quarter, had informed that under the One Time Restructuring (OTR) Plan with the lenders, it has debt servicing obligations aggregating to Rs 422.11 crores within the next 12 months.

This comprises repayment of the principal amount of Long-Term debts of Rs 277.04 crore and short-term borrowings of Rs 145.07 crore.

FLFL had further said that its "current liabilities exceeded its current assets (including assets held for sale) by Rs 1,180.66 crore as at March 31, 2022." Also, it has already defaulted on repayment of Rs 335.08 crore of principal amount on loans from banks as on June 30, 2022.

"The Lead bank and State Bank of India have classified the accounts of the company in the system as Non-Performing Assets (NPAs) on May 31, 2022, followed by other banks during the month of June 2022," it said.

FLFL was part of the 19 group companies operating in retail, wholesale, logistics and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a Rs 24,713 crore deal announced in August 2020.

The deal was called off by the billionaire Mukesh Ambani-led Reliance Industries Ltd in April, after it failed to get lenders' support of the respective companies.

Following this, the Kishore Biyani-led retail empire is in deep financial trouble. Several lenders have approached NCLT after default.

The NCLT has already initiated CIRP against Future Retail Ltd on July 20.

Future Enterprises Ltd is also facing two petitions by its creditors to initiate insolvency proceedings against the company.