Indian banks to start debt recovery proceedings against Future Retail -sources

Future Enterprises

21/03/2022 16:59

By Nupur Anand and Abhirup Roy
    MUMBAI, March 21 (Reuters) - Indian lenders are set to
initiate debt recovery proceedings against Future Retail
 FTRL.NS  this week to safeguard their interests after rival
Reliance unexpectedly took over some of the retailer's stores,
two bankers told Reuters.
    Future, hit by the pandemic, has been struggling to pay off
its debt and is fighting a bitter legal battle with U.S retail
giant Amazon. That battle has successfully blocked a $3.4
billion sale of its retail assets to India's largest retailer
Reliance, citing violation of certain contracts. 
    Future denies any wrongdoing. But Reliance Industries
 RELI.NS  suddenly took control of hundreds of Future stores
late last month, citing non-payment of rent, after assuming many
of the leases held by cash-strapped Future.
    State-owned lender Bank of Baroda  BOB.NS  will be the first
to take Future to the Debt Recovery Tribunal (DRT) and is
expected to file the paperwork this week, the two bankers said.
    "We are taking this step as a measure of last resort because
we want to protect ourselves in this legal fiasco," said one of
the bankers directly involved in the matter. "Going to DRT will
ensure that Reliance can't pull another sudden move." 
    Other lenders are likely to follow suit, the second banker
with knowledge of the matter told Reuters.
    Future Retail and BoB did not immediately respond to
requests for comment. 
    Future Group as a whole has more than $4 billion in debt and
lenders have already started classifying the loans as
non-performing assets (NPA) this quarter.
    Lenders are also likely to subsequently file a case in the
National Company Law Tribunal (NCLT) that handles corporate
insolvency cases, both bankers told Reuters. Future and Amazon
are fighting it out at multiple levels, including at India's
Supreme Court.
    Given the legal complexities in this case, approaching the
DRT first is likely to help banks attach, seize and sell
Future's assets promptly, instead of going after the entire
company at NCLT, Ketan Mukhija, a partner at Link Legal said.
     "It is a very strategic, tactical call (by the banks)," he
said. 
    ($1 = 76.1910 Indian rupees)


 (Reporting by Nupur Anand and Abhirup Roy; Editing by
Bernadette Baum)
 ((Nupur.Anand@thomsonreuters.com; +9122 68414388;))