MUMBAI: The fate of the Future group -Reliance Retail Rs 27,500 crore deal hangs in the balance with Bank of India, a lead consortium lender, initiating insolvency proceedings to recover dues from the beleaguered retailer.
“Bank of India has served an advance intimation of filing an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Company for default on non-payment of monies due in terms of the Framework Agreement entered into between the Company and Bank of India,” group company Future Retail said in an announcement to the exchanges on Thursday.
“We have received a copy of the Petition and are in the process of taking legal advice,” it added. Future Retail defaulted in payment of Rs 5,322.32 crore to a string of lenders by the due date of March 31, under a one-time restructuring plan (OTR). Another group company Future Enterprises had failed to pay an aggregate amount of Rs 2,835 crore to various banks and consortia under the OTR.
Earlier in December, Future group defaulted in payment of Rs 3494.56 crore to the banks, who in February this year suggested in the Supreme Court that Amazon and Reliance make an open bid for Future Group’s assets with a reserve price of Rs 17,000 crore, owed to the banks by Future group.
The latest development comes days before Future Group convenes meetings, April 20-22, of its stakeholders and creditors for approving the deal with Reliance, as per an NCLT direction. Reliance has already taken control of more than 800 retail stores of Future group, which failed to pay rent on the same to former.
The leases for these stores were taken over by Reliance from cash-strapped Future group’s landlords who served termination notices on Future, according to sources, a claim contested by Amazon, which has sought interim relief from Delhi HC against Future alienating its assets. The future group owes Reliance around Rs 5000 crore as rent, sources said. The stores taken by Reliance contribute around 55-60% of Future’s revenues.