MUMBAI: A majority of lenders to Future Group have rejected a deal involving the sale of its retail assets to RIL in the NCLT, with 69.29% voting against and only 30.71% in favour of the resolution, leaving bankruptcy as a strong possibility for the retailer, which owes Rs 29,000 crore to its lenders. At least 75% vote was required for the deal to pass muster.
Multiple sources confirmed to TNIE that bankers voted against the deal in the absence of any communication from RIL expressing the company’s intention to them on the deal with the retailer.
The spokesperson for Future Group didn’t respond to a TNIE query on the latest development, while an RIL spokesperson was not immediately available for comment.
Bank of India, the lead consortium lender, has already initiated insolvency proceedings against Future Retail Ltd (FRL) which missed meeting dues of over Rs 8,800 crore by December and March-end under a one-time restructuring scheme. Other lenders of FRL include SBI, Axis Bank and IDBI Bank.
Unsecured creditors voted 78.22% in favour of the deal while 21.78% voted against it. Of the Future group shareholders, 85.94% voted in favour while 14.06% voted against it. RIL took charge of 835 FRL stores in February after the latter failed to pay rent on the same to the oil-to telecom and retail conglomerate. Future Group in a note to the exchanges said that these stores accounted for 55-60% of its revenues.
Future Group entered into a Rs 257,00-crore to sell its assets to RIL in August 2020, but the deal was opposed by e-comm giant Amazon which holds an indirect stake in FRL through its investment in Future Coupons, a promoter group company. Amazon contends that this investment in 2019 gave it the right of first refusal in any sale of assets by FRL.
Amazon and FRL are locked in legal battles across various fora at home and in Singapore where a tribunal voted in its favour. The fate of these court cases remains uncertain with the possibility of insolvency proceedings against Future group becoming stronger.
Unfolding of events
August 2020: Future Group- RIL enter Rs 25,700 cr deal involving sale of former’s retail, warehousing and logistics assets
Oct 2020: Amazon opposes deal , S’pore Emergency Arbitrator rules in its favour
Oct 2021: Singapore International Arbitration Centre dismisses Future plea to set aside emergency order
Jan 2022: Delhi HC stayed arbitration proceedings after CCI revokes approval of Amazon investment in Future Coupons
Feb 2022: SC allows FRL to move Delhi HC to continue proceedings before NCLT for approval of RIL deal