National Company Law Tribunal (NCLAT) Orders Conclusion of Insolvency Proceedings for Future Lifestyle Fashion Within 3 Months

National Company Law Appellate Tribunal Orders Conclusion of Insolvency Proceedings for Future Lifestyle Fashion

The National Company Law Appellate Tribunal (NCLAT) has directed the conclusion of the insolvency proceedings for Future Lifestyle Fashion Ltd (FLFL) within three months. The appellate tribunal's two-member bench, comprising Justice Yogesh Khanna and Ajai Das Mehrotra, made this order while rejecting an appeal filed by an operational creditor.

The NCLAT observed that the Resolution Professional is still in possession of the leased property and cannot be released, hence dismissing the appeal. The tribunal further requested the Resolution Professional and the National Company Law Tribunal (NCLT) to conclude the proceedings as expeditiously as possible, preferably within three months from the date of the order.

The insolvency proceedings against FLFL were initiated by the Mumbai bench of NCLT on May 4, 2023, over a petition filed by Bank of India. The Insolvency & Bankruptcy Code (IBC) mandates completing Corporate Insolvency Resolution Process (CIRP) within 330 days, which includes time taken during litigations. This time limit has already been exhausted.

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During the proceedings, the NCLAT was informed that the property, for which an appeal has been filed, is the only premises where the operation of FLFL continues under its brand CENTRAL. The appellate tribunal noted that more than 80% of the Corporate Debtor's (FLFL) business comes from the subject Property.

The 18-page order further noted that the Resolution Professional disclosed at the 30th CoC meeting that the Central Store recorded total sales of Rs 1,211.74 lakh during the CIRP, whereas all the other stores combined recorded total sales of Rs 713.71 lakh during the CIRP. The possession of the Property by the Corporate Debtor is critical to maintain the Corporate Debtor as a going concern and to resolve the Corporate Debtor in the CIRP.

When a total of 16 stores have been vacated during CIRP, and the Resolution Professional team is currently in the process of vacating seven more stores, and only two stores as of date are operational, i.e., Central and Surat Stores. Before the crisis, which led to the collapse of the retail empire of Kishore Biyani-led Future Group, FLFL was operating in-house retail chains Central and Brand Factory, exclusive brand outlets (EBOs) and other multi-brand outlets (MBOs) of nearly a dozen apparel labels.

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