Reliance Retail drops Future Group deal after secured lenders reject it

ByRichard C. Sloan

Apr 23, 2022

Reliance Retail said on Saturday it would not proceed with its plan to buy Future Group’s business after the Kishore Biyani-led company’s secured lenders voted against the deal.

“In view of these results, shareholders and unsecured creditors of FRL voted in favor of the scheme. But the FRL’s secured creditors voted against the project. In view of this, the scheme of arrangement in question cannot be implemented,” Reliance said in a filing.

A majority of secured creditors on Friday voted against the resolution needed to approve Future Group’s Rs 24,713 crore plan to sell most of its retail and logistics business to Reliance Retail.

No less than 82.75% of Future Lifestyle’s secured creditors voted against the scheme. As many as 81.91% of shareholders voted for, as did 93.93% of unsecured creditors.

In Future Retail, 69.29% of secured creditors voted against the resolution, 85.94% of shareholders voted in favor of the merger plan while 69.29% of secured creditors voted against the resolution, and 78.22 % of Future Retail unsecured creditors voted in favor of the scheme.

In Future Supply Chains, 81.63% of secured creditors voted in favor of the device.

In Future Consumer, none of the company’s secured creditors voted in favor of the resolution, 99.86% of shareholders voted in favor of the merger plan and 77.4% of Future Consumer’s unsecured creditors voted in favor plan.

At Future Enterprises, 100% of shareholders voted in favor of the program. No less than 100% of secured creditors voted against the regime and 62.7% of unsecured creditors voted for it.

The vote came after an order from the National Company Law Tribunal (NCLT) on February 28 following a Supreme Court order, which allowed Future Group a meeting of shareholders and creditors to seek approval from the sale to Reliance Retail for approximately 24,713 crores.

Shareholders, secured and unsecured creditors of Future Group’s six listed companies voted on Tuesday and Wednesday. Bankers previously told ‘Business Standard’ that all major lenders had rejected the proposal.

Public sector lender Bank of India (BoI) has awarded Future Retail to NCLT for initiating resolution proceedings under the Insolvency and Bankruptcy Code.

BoI, the lead bank in Future Retail’s consortium of lenders, moved the NCLT in an attempt to settle the debt. The banks’ exposure is estimated at around Rs 17,000 crore.

According to documents filed by Future Retail on the exchanges, the BoI served advance notice of the filing of a 2016 IBC Section 7 claim against the company. This is a non-payment under the framework agreement between the two parties.

“We have received a copy of the petition and are in the process of taking legal advice,” FRL said in its exchange filing.

The application is expected to be brought before the Mumbai bench of the NCLT. No date has been given for this.

Earlier, Amazon had alleged that these shareholders and other meetings were against their previous deal with Future Group, which the latter said complied with the NCLT order.

Under the Rs 24,713 crore deal announced by Future Group in August 2020, Future Retail will sell 19 companies operating in the retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures.

In February, Reliance Group launched the takeover of 947 Future Group stores.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor