The Mumbai Bench of the National Company Law Tribunal (NCLT) has approved Reliance Retail Ventures Limited’s (RRVL) ₹171 crore resolution plan for Future Supply Chain Solutions Limited (FSCSL) — the logistics arm of the erstwhile Future Group — under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 [DHL Ecommerce Vs Future Supply Chain].
A Bench comprising Judicial Member Lakshmi Gurung and Technical Member Hariharan Neelakanta Iyer also directed the constitution of a monitoring committee to oversee the plan’s implementation.
“The Resolution Plan meets the requirements of the Code and the IBBI (CIRP) Regulations, 2016, and the same needs to be approved,” the Bench observed in its order of October 13.
The Corporate Insolvency Resolution Process (CIRP) against FSCSL was initiated on January 5, 2023 following a petition filed by DHL Ecommerce (India) Pvt. Ltd. under Section 9 of IBC.
Rajan Rawat was appointed as the Interim Resolution Professional (IRP) and subsequently confirmed as the Resolution Professional (RP).
After several rounds of reconstitution and extensions, the Committee of Creditors (CoC) comprising Azim Premji Trust, IDFC First Bank, JC Flowers ARC, State Bank of India, Goraj Automation Pvt. Ltd. and Siemens Factoring Pvt. Ltd. approved Reliance Retail’s resolution plan with 91.76% votes in favour in its 37th meeting held on March 4 this year.
The average fair value and liquidation value of FSCSL were determined at ₹170.69 crore and ₹133.35 crore respectively. Reliance Retail’s plan offered ₹171.38 crore, representing 100.41% of the fair value and 128.52% of the liquidation value.
According to the Resolution Professional’s Form-H, recoveries under the plan amounted to 19.15% of total admitted claims with the following distributions:
Financial creditors: ₹146.2 crore (28.8% recovery);
Operational creditors (including statutory dues): ₹5.82 crore;
Employees and workmen: ₹1.6 crore;
Secured operational creditor (MADC): ₹4 crore.
The CIRP cost, recorded at ₹8.91 crore, is to be paid on the effective date from existing cash balances.
During the course of hearings, the NCLT had sought clarifications on three issues — payment of employee benefit contributions, the conditional nature of the plan and the definition of the effective date.
The RP filed multiple affidavits addressing these queries while Reliance Retail deleted conditional clauses from the plan thereby, making it “unconditional and absolute.”
“The Resolution Plan submitted by the Resolution Applicant is not conditional in any manner that would hinder its implementation,” the RP stated in an affidavit dated August 2.
The Bench clarified that CIRP costs and all payments to creditors, including operational and dissenting financial creditors, must be made on the effective date.
“CIRP Costs shall be paid on the Effective Date. The Upfront Payment to Assenting Secured Financial Creditor shall be made on the Effective Date, and the dissenting unsecured financial creditors and operational creditors shall also be paid on the Effective Date in priority,” the order stated
While granting approval, the NCLT clarified that Reliance Retail would be protected under Section 32A of the Code, insulating it from liability for prior offences or non-compliances of the corporate debtor.
However, it refused to grant automatic exemptions from statutory payments or regulatory approvals:
“No automatic approval is granted on the reliefs or concessions. The Resolution Applicant has to apply to competent authorities and comply with applicable laws,” the Bench said.
It further held that consistent with the Supreme Court’s ruling in Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss ARC on the date of approval of the Resolution Plan… all such claims which are not a part of the Resolution Plan shall stand extinguished.”
A monitoring committee comprising the RP, two nominees of the approving financial creditors, and two nominees of Reliance Retail will oversee the implementation of the plan until completion.
The moratorium under Section 14 ceased with this order and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).
Advocate Nausher Kohli with Advocates Dhananjay Sud, Jyoti Dubey and RP Rajan Rawat appeared for the Resolution Professional
Advocates Madhav Kanoria, Surbhi Pareek, Jayesh Karnawat and Karthika Sanjay appeared for the successful resolution applicant (Reliance Retail Ventures Limited).
[Read Order]