Resurgent India Special Situations Fund's plea admitted; Moratorium imposed under IBC Section 14
In a significant development, the National Company Law Tribunal (NCLT) Mumbai Bench has admitted the application filed by Resurgent India Special Situations Fund (RISSF) to initiate the Corporate Insolvency Resolution Process (CIRP) against Future Consumer Limited (FCL), a prominent entity within the Future Group. The decision came after RISSF, a registered Category I Alternative Investment Fund, sought relief under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, citing a default exceeding the threshold limit of Rs. 1 crore.
The tribunal, comprising Shri Nilesh Sharma, Member (Judicial), and Shri Sameer Kakar, Member (Technical), found that FCL had defaulted on financial debts related to secured redeemable non-convertible debentures, which amounted to Rs. 263.77 crore as of June 30, 2025. Despite various waivers and extensions granted by the debenture holders, FCL failed to meet its repayment obligations, prompting the financial creditor to enforce the debt.
The NCLT order imposes a moratorium under Section 14 of the IBC, prohibiting the institution or continuation of suits against FCL, transferring or encumbering assets, and recovery of property occupied by the corporate debtor. The tribunal emphasized that the supply of essential goods or services to FCL should not be interrupted during the moratorium period.
The tribunal appointed Aegis Resolution Services Private Limited as the Interim Resolution Professional (IRP) to manage FCL's insolvency proceedings, issue public notices, invite claims, and report the progress of CIRP. The IRP is tasked with ensuring FCL continues as a going concern during the insolvency process.
This decision comes amid Future Group's ongoing financial challenges, exacerbated by the COVID-19 pandemic and failed restructuring efforts involving Reliance Retail Ventures Limited. Despite FCL's contention that it remains a viable business entity with potential future recoveries, the NCLT upheld the financial creditor's application, citing a clear admission of debt and default by FCL in its audited balance sheets.
The tribunal's order underscores the IBC's mandate to initiate insolvency proceedings once a corporate debtor defaults on a financial debt exceeding the prescribed threshold. It reiterates that the adjudicating authority's role is limited to verifying the existence of a default, without delving into disputes regarding the debt or the debtor's ability to pay.
The CIRP aims to resolve FCL's insolvency through a viable resolution plan accepted by its Committee of Creditors (CoC), safeguarding the company's assets and ensuring its revival.
Bottom line:-
Insolvency - Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Financial Creditor's application admitted due to default exceeding threshold limit of Rs. 1 crore - Moratorium imposed under Section 14 of the Code.
Statutory provision(s): Section 7, Section 14, Section 5(8), Section 18 of the Limitation Act, 1963, Section 31(1), Section 33 of the Insolvency and Bankruptcy Code, 2016
