Future Retail lenders reject Rs 24,713-cr deal with Reliance
As per the regulatory filing, 69.29 per cent lenders voted against the RIL deal and 30.71 per cent secured creditors vote in favour of the deal.
- Apr 22, 2022,
- Updated Apr 22, 2022 9:53 PM IST
Future Group's proposed Rs 24,713-crore deal with Mukesh Ambani's Reliance Industries has been rejected by the lenders in a blow to the company which now faces the prospect of a bankruptcy process.
As per the regulatory filing on Friday, 69.29 per cent FRL enders voted against the RIL deal and 30.71 per cent secured creditors vote in favour of the deal.
Further, FRL secured 85.94 per cent shareholders ' vote in favour of the deal while 14.06 per cent voted against it. Also, 78.22 per cent unsecured creditors voted in favour while 21.78 per cent against.
While more than 75 per cent of shareholders and unsecured creditors supported the deal, FRL did not get the requisite 75 per cent favourable voting from secured creditors.
Secured creditors are granted security from a company through either a legal fixed or floating charge over the business’ assets and get preference over unsecured creditors in payment of dues by a company.
Another group firm Future Lifestyle Fashion Ltd (FLFL) said that a majority of its secured creditors have voted against the deal.
FLFL’s 82.75 per cent secured creditors voted against the deal while 17.25 per cent supported it.
Similarly, 81.91 per cent of shareholders supported the deal and 18.09 per cent opposed it.
The voting took place amid the long-drawn dispute between US e-commerce giant Amazon and Kishore Biyani-led Future Group against the deal with RIL.
In a strongly-worded letter to Kishore Biyani and other promoters of FRL, Amazon had recently said it was ''illegal'' and such a step would not only breach 2019 agreements when it made investments into FRL's promoter firm but also violate a Singapore arbitral tribunal's injunction on the sale of retail assets to Reliance.
However, FRL had rejected the allegations and said the meetings are ''in compliance of the directions'' issued by the NCLT on February 28, 2022 to consider and approve the Scheme of Arrangement filed by various entities, who are part of the deal.
In a regulatory update on April 16, FRL said, ''the said order has been issued by the NCLT, after considering all the facts and information submitted by the parties and specific objections filed by Amazon.Com NV Investment Holdings LLC vide an intervening application and the order dated 15th February 2022 issued by Supreme Court on the same subject matter''.
Last week, public sector lender Bank of India (BOI) moved NCLT seeking initiation of insolvency proceedings against FRL and a moratorium over the assets of the Kishore Biyani-led debt-ridden firm.
Besides, BOI, the lead banker of a consortium of banks that lent money to FRL, suggested the insolvency tribunal to appoint Vijay Kumar V Iyer as the interim resolution professional of the company.
Over the matter, FRL had said it has been served and received a copy of the petition and is in the ''process of taking legal advice''.
Earlier this month, FRL reported defaulting on payment of Rs 5,322.32 crore to its lenders on account of the ongoing litigations with Amazon and other related issues.
Amazon is opposed to Reliance's August 2020 offer to buy FRL's stores and warehouses for Rs 24,713 crore on grounds that the deal violated its 2019 agreement through which it acquired a 49 per cent stake in FCPL, the promoter entity of FRL, for about Rs 1,500 crore.
It has dragged Future to arbitration and in courts to block the Reliance deal.
In late February, Reliance quietly began taking over the rental leases of hundreds of stores once run by FRL and Future Lifestyle Fashions Ltd amid lawsuits and arbitration across India and Singapore.
FRL is part of the Rs 24,713 crore deal announced by Future Group in August 2020, under which it is to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to RRVL.
All 19 companies would be consolidated into one entity -- Future Enterprises Ltd -- and then transferred to RRVL under the proposed deal.
Future Group's proposed Rs 24,713-crore deal with Mukesh Ambani's Reliance Industries has been rejected by the lenders in a blow to the company which now faces the prospect of a bankruptcy process.
As per the regulatory filing on Friday, 69.29 per cent FRL enders voted against the RIL deal and 30.71 per cent secured creditors vote in favour of the deal.
Further, FRL secured 85.94 per cent shareholders ' vote in favour of the deal while 14.06 per cent voted against it. Also, 78.22 per cent unsecured creditors voted in favour while 21.78 per cent against.
While more than 75 per cent of shareholders and unsecured creditors supported the deal, FRL did not get the requisite 75 per cent favourable voting from secured creditors.
Secured creditors are granted security from a company through either a legal fixed or floating charge over the business’ assets and get preference over unsecured creditors in payment of dues by a company.
Another group firm Future Lifestyle Fashion Ltd (FLFL) said that a majority of its secured creditors have voted against the deal.
FLFL’s 82.75 per cent secured creditors voted against the deal while 17.25 per cent supported it.
Similarly, 81.91 per cent of shareholders supported the deal and 18.09 per cent opposed it.
The voting took place amid the long-drawn dispute between US e-commerce giant Amazon and Kishore Biyani-led Future Group against the deal with RIL.
In a strongly-worded letter to Kishore Biyani and other promoters of FRL, Amazon had recently said it was ''illegal'' and such a step would not only breach 2019 agreements when it made investments into FRL's promoter firm but also violate a Singapore arbitral tribunal's injunction on the sale of retail assets to Reliance.
However, FRL had rejected the allegations and said the meetings are ''in compliance of the directions'' issued by the NCLT on February 28, 2022 to consider and approve the Scheme of Arrangement filed by various entities, who are part of the deal.
In a regulatory update on April 16, FRL said, ''the said order has been issued by the NCLT, after considering all the facts and information submitted by the parties and specific objections filed by Amazon.Com NV Investment Holdings LLC vide an intervening application and the order dated 15th February 2022 issued by Supreme Court on the same subject matter''.
Last week, public sector lender Bank of India (BOI) moved NCLT seeking initiation of insolvency proceedings against FRL and a moratorium over the assets of the Kishore Biyani-led debt-ridden firm.
Besides, BOI, the lead banker of a consortium of banks that lent money to FRL, suggested the insolvency tribunal to appoint Vijay Kumar V Iyer as the interim resolution professional of the company.
Over the matter, FRL had said it has been served and received a copy of the petition and is in the ''process of taking legal advice''.
Earlier this month, FRL reported defaulting on payment of Rs 5,322.32 crore to its lenders on account of the ongoing litigations with Amazon and other related issues.
Amazon is opposed to Reliance's August 2020 offer to buy FRL's stores and warehouses for Rs 24,713 crore on grounds that the deal violated its 2019 agreement through which it acquired a 49 per cent stake in FCPL, the promoter entity of FRL, for about Rs 1,500 crore.
It has dragged Future to arbitration and in courts to block the Reliance deal.
In late February, Reliance quietly began taking over the rental leases of hundreds of stores once run by FRL and Future Lifestyle Fashions Ltd amid lawsuits and arbitration across India and Singapore.
FRL is part of the Rs 24,713 crore deal announced by Future Group in August 2020, under which it is to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to RRVL.
All 19 companies would be consolidated into one entity -- Future Enterprises Ltd -- and then transferred to RRVL under the proposed deal.