SpaceMantra Opts Out Of Resolution Plan For Kishore Biyani’s Future Lifestyle

SpaceMantra Opts Out Of Resolution Plan For Kishore Biyani’s Future Lifestyle

This has put creditors of the debt-laden company in a quandary

SpaceMantra, the winning bidder to take over Kishore Biyani's retail brand outlet Future Lifestyle Fashions Ltd (FLFL), has withdrawn its resolution plan for the company days before lenders overwhelmingly voted for it.

The Rs.2,490 crore bid was withdrawn citing delays and value erosion. Creditors, including lead lender the State Bank of India (SBI), face hurdles in recovery as the consortium fails to comply with payment obligations, risking only a Rs.22 crore deposit.

Promoted by former NBCC chairman Anoop Kumar Mittal, along with two individuals, Sandeep Gupta and Shalini Gupta, SpaceMantra had emerged as the sole bidder for FLFL after almost an 18-month process since the company was admitted to bankruptcy in May 2023.

The company was to pay Rs.490 crore (14 percent recovery for creditors) within 90 days of the National Company Law Tribunal (NCLT) approval. However, even as lenders put to vote its proposal earlier this month, the SpaceMantra-led consortium backed out.

In a 25 September letter to the resolution professional (RP) Ravi Sethia, the consortium said it was no longer interested in continuing its resolution plan.

The letter came two days before the end of the voting period. It was followed by a creditors' meeting on 26 September, in which voting was concluded. Subsequently, the SpaceMantra consortium was unanimously declared the winning bidder through a stock market disclosure on 28 September.

Sethia’s letter read, "It is imperative to note that the resolution plan submitted by the resolution applicant put to vote the discussions of the 21st CoC meeting held on 13 August has been approved by the CoC with the requisite majority. Therefore, you must comply with the terms and unconditionally accept the letter of intent issued by the undersigned on 27 September.”

Meanwhile, the creditors insist the company completes its obligation and fulfills the payments due.

They stated that seemingly, SpaceMantra was backed by a large corporate group which pulled out. On its own, the company could never be taken seriously, but since it was the only bidder, banks had no choice but to accept the bid. The events highlight the challenges banks face in recovery, as bidders can never be trusted to fulfill their commitment.

The creditors hope to impound the Rs.2 crore earnest money deposited by the consortium, but admit they have very little recourse.

The updated claims show that FLFL and retail chains owner Central and Brand Factory owe creditors including bondholders Rs.3,478 crore. SBI is the lead lender with claims of Rs.477 crore. Bondholders represented by Catalyst Trusteeship and Centbank Financial Services are owed Rs.1,100 crore.

Previously, FLFL operated over 300 stores selling clothes, footwear and accessories of various third-party and in-house brands.