NCLT recently reserved its order on the Bank of India petition for initiating a corporate insolvency resolution against Future Retail Ltd. With this, the company shareholders are questioning the role of banks and the need for SEBI intervention to protect their rights. In a Twitter Spaces session with The Plunge Daily, Vijay Kulkarni, an advocate and Future Retail shareholder, raised several pertinent questions regarding the FRL board’s conduct and alleged that they have failed to safeguard the interests of the shareholders.
Kulkarni questioned FRL’s move to liquidation if its deal to sell assets to Reliance fails.
“Why is the FRL board sticking to only Reliance for selling its assets? There were options like amalgamation, consolidation and swap ratio, which FRL could have explored before it decided to take the insolvency and bankruptcy route. Also, it is absolutely incorrect for any board and also the bankers to have only one plan. There should have been a revival plan designed through the amalgamation process subject to clearance from courts and Amazon,” he asked.
Kulkarni also raised concerns about the statement made by the FRL CEO amidst the possibility of a wipeout of its entire investments.
“When the FRL CEO comes out and mentions that they will be touching about one lakh online transactions per day, does it even look like a case of liquidation? It clearly indicates that he had knowledge about the business potential and market trends, which was not shared for shareholders’ benefit. SEBI has also failed to satisfy the interests of FRL shareholders as it is taking a long time to investigate the matter.”
The role of independent directors has, time and again, come under the scanner. There have been several instances where an independent director has been accused of colluding with promoters and not working in the interests of the shareholders. Questioning their actions, Mr Kulkarni said, “When Amazon confirmed to invest Rs 7,000 crore for buying all retail assets of FRL, what stopped the directors from evaluating and providing paperwork to go ahead and rescue FRL out of this matter? Why there was a clear mandate to only amalgamate with Reliance? They did not communicate their reasons and made no efforts to protect the stakeholders. Every allegation against independent directors has to be probed.”
While the SIAC has rejected the Future Group’s plea to terminate the arbitration proceedings between the Kishore Biyani-led firm and Amazon, Kulkarni is hopeful about the protection of the interest of shareholders.