Future Retail Moves Supreme Court To Avoid Insolvency Process
Future retail moves Supreme Court to avoid insolvency process rejects Amazon’s offer of help.
Future Retail Ltd. (FRL) has appealed to the Supreme Court to avoid insolvency proceedings after a default in payment of a loan.
Along with this, the independent directors of FRL have turned down Amazon’s offer of financial assistance to the company.
The e-commerce giant had offered financial support to FRL through a deal with private equity firm Samara Capital. Amazon’s offer is not even one-third compared to Mukesh Ambani’s offer of Reliance.
India’s second-largest retail company operates multi-brand retail chains such as Big Bazaar, Easyday, and Heritage.
The company has defaulted on payment of Rs 3,494.56 crore to the lenders by the stipulated date of end-December. The company has sought 30 days’ time to deal with the situation.
After failing to raise money, the company has approached the apex court to “avoid” the lenders from declaring it a defaulter.
In its petition, Future has mentioned the dispute with Amazon that has stalled its Rs 24,713 crore deal with Reliance.
Future retail moves Supreme Court: Meanwhile, Future Retail Ltd has rejected Amazon’s offer of financial help.
The company’s independent directors have said that Amazon’s offer is merely an attempt to buy FRL’s properties “cheaply”.
FRL’s independent directors had last week asked Amazon whether it was willing to extend a long-term loan to prevent defaults on its Rs 3,500 crore loan repayment due on January 29.
In response, Amazon had said that it was ready to finance Future Retail through Samara Capital, but for this, it would have to withdraw from the Rs 24,713 crore deal with Reliance.
Independent directors of Future Retail said in a letter on Tuesday that it has now become clear that these letters were written by Amazon only to create “confusion”.
The independent directors said, “We are not considering any proposal from your side.
Unless there is a legally valid and realistic solution to meet the capital requirements of the FRL, no proposal will be considered.
Amazon had told FRL that Samara Capital was keen to buy the debt-ridden company’s retail business like Big Bazaar for Rs 7,000 crore.
Amazon has also asked FRL to provide its financial details to Samara Capital so that the private equity fund can complete the scrutiny process.
Independent directors say the Rs 7,000 crore offer is too low to meet the liabilities of FRL.
The bank liabilities of FRL and the committed payments to vendors alone will be Rs 12,027.31 crore by March 2022, the letter said.
The letter also mentioned that the company’s independent directors had approved the deal with Reliance as it allowed FRL not only to clear dues of public sector banks but also to pay suppliers.
All liabilities of FRL were being met through this transaction.
A copy of this letter has been sent to the Enforcement Directorate, SEBI, Competition Commission of India (CCI), and directors of FRL including State Bank of India, Union Bank of India, Bank of Baroda.
