future retail: Future Retail moves Supreme Court on lenders’ insolvency notice
Informing the court about its high value assets – 1,209 stores in 391 cities spread across all states, Future Retail said it has an outstanding of Rs 5,000 crore payable to around 26 banks and financial institutions, which had agreed for restructuring of its assets through the deal with Reliance.
It said the infusion of Rs 25,000 crores by Reliance Retail would not only save the wide-spread valuable assets of Future Retail from being sold off cheaply by lenders through bankruptcy proceedings, but also would fully satisfy the outstanding amounts due to the banks and FIs, in addition to saving the jobs of nearly 25,000 employees working in these stores.
On January 11, the SC had reserved orders on the future course of the multi-layered litigations between Biyani group’s Future Coupons and cash-starved Future Retails, the latter managing to stay afloat with a promised Rs 25,000 crore deal with Reliance Industries, on one side and the trillion dollar multinational retail company Amazon on the opposite.
With complications galore in the high-stake dispute – orders of Emergency Arbitrator of Singapore restraining Future Retails from going ahead with the Rs 24,713 crore deal for sale of retail chain assets to Reliance; the Competition Commission of India keeping in abeyance its earlier permission for Amazon’s Rs 1,431 crore investment in Future Coupons, a bench headed by CJI N V Ramana had heard composite arguments from all sides.
Amazon has 49% stake in Future Coupons, which in turn owns 9.82% shares in Future Retail. It was Amazon’s contention that Biyani group could not have entered into a deal with Reliance Industries without the approval of Future Coupons Board. Biyani group had argued that it’s retail business had become zero during the pandemic and ran into serious debt. “Reliance is ready to pump in Rs 25,000 crore into the retail chain, retain all 25,000 employees and service the debts of the retail chain owning company,” it had said.
In its fresh writ petition, Future Retail told the SC that since the promising deal (with Reliance Retail) has been stalled because of events beyond its control (Amazon invoking arbitration in which Future Retail is a non-signatory party), it had not been able to monetise its Small Format Stores and other assets.
It said the lenders’ letters threatening Initiation of proceedings at this critical juncture, even when they had extended timeline for monetization of small format stores, would be detrimental to the interests of both Future Retails and the banks. It requested the SC to direct the lenders to withdraw their notices.
