Future Retail’s lenders on Thursday evening selected Vijaykumar Iyer, backed by Deloitte India, as the interim resolution professional for referring the Kishore Biyani-promoted hypermarket chain to the bankruptcy court, said three people aware of the development.
Lenders will approach the Mumbai bench of the National Company Law Tribunal next week, seeking to initiate proceedings against the retailer, they said.
It takes a minimum of six months to admit a company into insolvency proceedings, despite the 14-day ceiling prescribed by the law. If the company does get admitted by the NCLT, it will have a bearing on the Rs 24,713-crore offer that Reliance Retail had made in August 2020 to acquire the Future Group firm. Moreover, it will allow other potential buyers, such as Amazon, to bid for the company. The Future-Reliance is stuck due to legal challenges posed by Amazon.
Meanwhile, IndusInd Bank last week cancelled a deal to sell Future Retail and Asian Hotel (North) loans to Edelweiss Asset Reconstruction Company without specifying any reason. The bank had proposed to sell Rs 141 crore of Future Retail and Rs 106 crore Asian Hotel (North) loans by the end of March under a 15:85 structure wherein the ARC was to pay 15% upfront and the remaining after recovering the money from the borrower.
Deloitte, Edelweiss ARC and IndusInd Bank did not respond till press time Friday to ET’s request for comment.
Lenders decided to approach the NCLT after the company defaulted on Rs 3,495 crore of loans in January as per the terms of a one-time restructuring deal. The key factor that influenced their decision was the uncertainty of recovery, after Reliance took control of more than 800 of Future Retail’s 1,500 store sites over a month ago citing non-payment of rentals.
The move to approach the NCLT comes ahead of a creditors’ meeting scheduled on April 21 to vote on the scheme of arrangement proposed by Reliance Industries and Future Group on the multi-stage sale of Future assets.
Amazon and the Future Group have filed petitions and counterpetitions over the deal in multiple legal forums. Amazon claims that the terms of its 2019 investment in a Future Retail promoter firm gave it the first right of refusal in any stake sale in the Indian retailer and also barred it from selling a stake to Reliance entities.
The outcome of proceedings at the Singapore International Arbitration Centre, which will now resume its hearing on the validity of the Future-Reliance deal, too will have a bearing on the recovery that the lenders would make.
Lenders had invited offers from insolvency professionals to submit a technical and financial bid by March 29.
Vijaykumar Iyer has been a resolution professional for more than 10 companies, including Banani Cement, Bhushan Steel, and the group insolvency of Aircel, Dishnet Wireless and Aircel Cellular.
