Lenders tap buyers for future assets

The talks, if successful, will give buyers access to properties in Future Retail’s Big Bazaar stores, which are now under control of Reliance Industries, said the people, seeking anonymity. Assets include store fixtures, store infrastructure, merchandise and inventory.

The deal will potentially clear the way for Reliance Industries to restart retail operations at 950-odd Big Bazaar stores under its control as the duty on property inside stores will be removed. In addition, lenders will be able to recover a substantial part of their dues.

A spokesperson for the Edelweiss Group declined to comment. Emails sent to a Reliance spokesperson on Sunday did not elicit any response. Similarly, emails sent to spokespersons for lenders of Future Group remained unanswered.

Future Retail, which owes 12,000 crore to its 28-odd lenders, defaulted in loan repayment, and recovery prospects look bleak for banks, with Reliance Industries taking over Big Bazaar stores across the country, boosting Future Retail’s cash flow has decreased.

In March, Reliance became a sub-lessor of the premises of more than 950 Big Bazaar stores of Future Retail and took control of the space inside them.

However, Reliance has not been able to resume retail operations in these stores as the lenders of Future Retail are entitled to first charge on the collateral, which includes or is about to be stocked, fixtures, billing systems, racks and other essentials . used in these outlets.

Future Group has claimed that it had no prior knowledge of Reliance’s move and denied allegations of collusion.

Mint reported on March 21 that Future Retail’s lenders decided to initiate recovery proceedings through the Debt Recovery Tribunal. The change in stance comes after Future claimed it was unaware of the acquisition, and that banks now believe suing the company will create further complications. Mint, citing bankers aware of the matter, had reported that Future Group’s lenders are keeping all procedures ready and may instead choose to refer it to an insolvency court, but not all banks agree to it because of bankruptcy. The rules mandate an immediate moratorium, which could further decline in the value of Future Group’s assets.

Bank of Baroda has been assigned the task of registering a case in the Debt Recovery Tribunal under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) Act.

The loan to Future Retail was classified as non-performing in January after the company failed to repay.

On 16 March, Future Retail told exchanges that mounting losses had seen a sharp drop in its sales and a complete erosion of its net worth. The company said its proposed deal with Reliance not only ensured continuity of business but also ensured a significant repayment of dues to lenders. Future Retail said its strained cash flow had built up dues to sellers and lessors, which is why it remained in default, with many lessees issuing termination notices to evict the properties.

However, since the proposed The Rs 24,713 crore asset sale deal between Future and Reliance is currently in dispute in the Supreme Court, and the Singapore International Arbitration Center has restrained the transfer or sale of any retail assets of Future Retail to Reliance, the latter being directly retailed. may not buy or acquire the assets of Future Retail, which owns the domestic brand Big Bazaar.