Future Retail’s moratorium ends; What’s next for banks?

The banker said that while the moratorium ended on September 30, the repayment would be due by the end of December. This is because Future Retail will have to clear its dues for the October-December period by the end of December. If it fails to pay, it will default on January 1. He added that banks would have another 90 days before the loans could be classified as non-performing.

“The company has informed that it is making profits and is performing well after debt restructuring. However, the company is yet to sell non-core assets as part of its commitment to infuse cash, and this is a major hurdle,” the banker quoted above said.

He said the lenders will meet again in December to consider the possibility of sending Future Retail to the National Company Law Tribunal (NCLT) for resolution. “This will make things difficult not only for the company, but also for the lenders,” the banker said, adding that the debt restructuring was seen as a ‘Plan B’ under the Reserve Bank of India’s guidelines if Reliance Retail Ventures Ltd (part of ) Mukesh Ambani’s Reliance Industries Ltd.) did not materialise. Amazon.com Inc. is opposing the sale in the Supreme Court.

Spokespersons for Union Bank of India, Future Group and Reliance Industries did not respond to emails seeking comment on the story.

However, a Future Group official said the NCLT’s September 28 decision to allow the Kishor Biyani-led group to hold a meeting of shareholders and creditors to seek approval for sale of assets to Reliance Retail is in the right direction. is a step. Amazon had filed an application objecting the NCLT’s decision, observing that the plan is pending completion of arbitration proceedings against Future Retail.

“If we get all the necessary approvals, no one can stop the deal from going ahead,” the future official said on condition of anonymity.

The arrangement between Future and Reliance Retail is planned to consolidate Future Group’s retail, wholesale, logistics and warehousing assets into a single entity—Future Enterprises Ltd., which will then be transferred to Reliance Retail. Last August, Reliance Retail agreed to buy the assets of Future Group ₹24,713 crores. The deal has been opposed by Amazon, an investor in Future Coupons, which is a shareholder in Future Retail Ltd. While the original deadline for the deal was March, it was extended to September 30 due to a legal battle with Amazon.

In August 2019, Amazon bought a 49% stake in Future Coupons Ltd. (which owns 7.3% equity in Future Retail through convertible warrants), with the right to buy into the flagship Future Retail after a period of 3 to 10 years. Following the announcement of the deal by Reliance, Amazon pulled Future to the Singapore International Arbitration Center (SIAC), which passed an interim award preventing Future Retail from going ahead with the deal. Amazon and Future are now fighting a legal battle in the Supreme Court, which recently ruled in Amazon’s favor that the award from SIAC was valid and enforceable under Indian laws.