Proxy adviser InGovern Research Services has written to the Insolvency and Bankruptcy Board of India alleging that Future Retail Ltd’s (FRL) Resolution Professional (RP) has failed to safeguard the debt-laden company’s assets for creditors and shareholders.
Vijay Kumar Iyer, the resolution professional, didn’t respond to businessline ‘s query seeking comment.
On Wednesday, the proxy advisory firm wrote a four-page letter addressed to the IBBI with the subject line ‘Inaction of the Resolution Professional of Future Retail Limited in recovering assets.’
The Resolution Professional is duty bound to protect and preserve the value of assets of FRL and clawback value which has been removed unlawfully by suspicious transactions, the firm said.
Store closure
In February-March 2022, FRL made public disclosures that 835 retail stores, accounting for 55-65 per cent of its revenues, had shut down on account of strained cash flows, and its inability to pay lease rentals. Reliance Retail took over stores of cash-strapped Future Retail, citing defaults in payments. The stores were sub-leased to Future Retail by Reliance. The overnight takeover of the stores happened even as the two companies were locked in a legal dispute with Amazon over Future Group’s ₹24,713-crore asset sale to Reliance.
In this regard, InGovern said: “The location and security of all movable and immovable properties of the company, its subsidiaries and its associate companies is very important. This set of companies should also include the promoter group companies. In addition, it is important that all stores and goods that were transferred to the Reliance group should be recovered, including from the promoters of FRL, in the interests of public shareholders and creditors of FRL.”
Signed by the Managing Director of InGovern, Shriram Subramanian, the letter was also marked to the Ministry of Finance, Ministry of Corporate Affairs, and the Reserve Bank of India.
FRL owes the creditors, including large public sector banks, over ₹17,000 crore which is in danger of being written off as the substantial assets of FRL have been frittered away.
It sought action against the RP: “We request your kind and urgent intervention in this matter, including by directing Shri Vijaykumar Iyer, Resolution Professional, to take appropriate action under the IBC read with allied regulations to protect and safeguard the assets of FRL,” it added.