Mumbai : Amazon’s efforts to oppose Bank of India’s move to initiate corporate insolvency resolution proceedings against debt-ridden Future Retail Ltd will be a daunting task, experts said.
The National Company Law Tribunal (NCLT) is hearing Amazon’s intervention application opposing insolvency proceedings against the company, which owes approx. 15,000 crore to the creditors led by Bank of India.
In its application, the US e-commerce major has argued that 26 banks, led by BoI, have colluded with FRL to deny rights to Amazon, and urged the NCLT to allow banks to dispose of FRL’s remaining assets. Do not allow settlement to recover your investment.
Experts said Amazon’s efforts to intervene would delay the entire resolution process, and if the insolvency case is accepted, there would be an adjournment that would halt the arbitration proceedings currently underway at the Singapore International Arbitration Centre.
“Amazon, as a shareholder, will not play any role in the insolvency process. Only financial creditors can participate in the meetings of the committee of creditors and will be allowed to attend the meetings if the operational creditor has a claim of more than 10% of the debt. Amazon is neither a financial creditor nor an operational creditor, but just a shareholder holding a substantial stake in the company. This does not entitle it to be a member of the committee of creditors,” said Ashish Pyasi, associate partner, Dheer & Dheer Associates.
“As the corporate debtor is run by a separate management, Amazon has no authority or authority to deal with the assets and will not be able to do anything until it takes control of management. Taking the management into their own hands once the insolvency process starts will not help either.”
In its petition before the NCLT, Amazon stated that Future Group did not honor the Singapore emergency arbitrator’s October 25, 2020 award. Amazon had moved the emergency intermediary in Singapore for alleged breach of contract by Future Retail. Amazon’s counsel said the Delhi High Court had also upheld the tribunal’s order. “Unless a competent authority sets aside the EA order, Future Group is bound by the order,” Amazon said during the NCLT hearing.
In August 2021, the apex court, too, held the award of EA to be valid and enforceable under Indian law. However, Future did not implement the award, which led to a protracted legal battle.
Ramesh Vaidyanathan, managing partner, Advaya Legal, said, “The moment the corporate insolvency process is admitted before the NCLT, all proceedings in every court will have to be stayed.