The National Company Law Appellate Tribunal, on April 6, 2026, directed that the insolvency resolution process of Future Lifestyle Fashions Ltd (FLFL) must conclude within a strict three-month timeframe. A two-member bench of Justice Yogesh Khanna and Ajai Das Mehrotra issued the directive while dismissing an appeal by an operational creditor seeking to vacate a property critical to the company's survival, noting that the insolvency proceedings have already exceeded the 330-day statutory limit prescribed under the IBC.
Background
Future Lifestyle Fashions Ltd, part of the erstwhile Future Group, has been in the Corporate Insolvency Resolution Process for an extended period that has significantly overshot the statutory timelines under Section 12 of the Insolvency and Bankruptcy Code. The company, which operates the 'Central' retail brand, has a market capitalisation of approximately Rs 25-30 crore and reports a negative book value, reflecting deep financial distress.
The appeal before the NCLAT was filed by an operational creditor seeking to vacate a property that houses the company's Central brand store — a property that generates over 80% of FLFL's total business revenue. The resolution professional opposed the appeal, arguing that losing this property would effectively destroy the company's ability to operate as a going concern.
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The NCLAT's order addressed two significant aspects:
Three-month resolution deadline: The tribunal directed that the insolvency resolution process must be brought to conclusion within three months from the date of the order. This deadline applies to the submission, evaluation, and approval of resolution plans by the Committee of Creditors and the NCLT.
Property vacating appeal dismissed: The bench declined to order the vacation of the property housing the Central brand store, recognising its critical importance to the company's revenue generation and operational viability. The tribunal held that removing this asset during the resolution process would undermine the purpose of the CIRP itself.
Emphasis on expeditious resolution: The tribunal noted that the extended duration of the proceedings had eroded value and creditor confidence, and that further delays would make a viable resolution plan increasingly unlikely.
Implications for Practitioners
The three-month ultimatum puts immediate pressure on the resolution professional and the Committee of Creditors to finalise a resolution plan. Given FLFL's negative book value and limited market capitalisation, potential resolution applicants face a narrow window to conduct due diligence, structure offers, and obtain CoC approval.
For insolvency practitioners managing prolonged CIRP proceedings, this order signals the NCLAT's diminishing tolerance for timeline overruns. The tribunal's willingness to impose hard deadlines — rather than granting further extensions — suggests that companies in protracted insolvency may face accelerated liquidation if resolution plans are not forthcoming.
The property protection aspect of the ruling is equally significant. It establishes that operational assets generating a substantial portion of the corporate debtor's revenue cannot be stripped during the CIRP, as doing so would transform an insolvency resolution process into a de facto liquidation.
Frequently Asked Questions
Can the Committee of Creditors request an extension beyond the three-month deadline?
The NCLAT's directive is an order of the appellate tribunal and carries binding force. While the CoC may approach the NCLAT seeking modification if genuine resolution progress is being made, the tribunal's order reflects its view that the statutory timelines have already been significantly exceeded, making further extensions unlikely absent exceptional circumstances.
What is the likely outcome if no resolution plan is approved within the deadline?
If the three-month deadline passes without an approved resolution plan, the NCLT would likely order liquidation under Section 33 of the IBC. Liquidation would result in the appointment of a liquidator, cessation of the company's operations, realisation of assets, and distribution of proceeds to creditors in the waterfall priority established under Section 53.