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The Kishore Biyani-led Future Group faces an uncertain future as the large deal with Reliance has fallen through.
The group is burdened with loans and its lenders are looking to drag the company through insolvency procedures to recover their dues.
In August 2020, Reliance Industries had intimated the bourses about an arrangement whereby the conglomerate would take over the logistics, warehousing, retail and wholesale businesses, a total of 18 companies of the Future Group for Rs 24,731 crores.
Future Group owes around Rs 20,000 crores to its secured creditors and Rs 8,000 crores to its unsecured creditors. Future Retail and Future Enterprises are responsible for the majority of the loans. The Reliance deal could've been a game-changer for the stressed group, but the secured lenders of Future Group voted against the deal, with 69.29% against the deal, causing the deal to be rejected.
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Moreover, Amazon had won a series of legal injunctions against Future Group which had effectively blocked the deal for the group. A Singapore arbitration panel and Indian courts have backed Amazon but the Indian stock exchanges have backed the deal.
It is being reported that the lenders of Future Group are looking to drag the companies of Future Group through Insolvency proceedings with a recovery expectation of less than 10%. Bank of India, the lead lender of the group, has filed a petition for initiating insolvency proceedings in the Mumbai Bankruptcy court.
However, RIL was not the loser here. In February this year, RIL started the process of taking over 800 out of the 1,400 stores of FRL like Big Bazaar along with FBB, Easyday, and Heritage.
RIL took over the lease of these stores from FRL by getting directly into a deal with the owners of the real estate. RIL then ousted FRL as the tenant from those leased stores and has opened its own brands in the same retail spaces. Moreover, now that the company is going through Insolvency, Reliance can bid for whatever assets the company is left with.
However, the group is trying to recover its existing brands. Future Lifestyle Fashions Limited (CLG), the apparel firm, is not a part of the insolvency proceedings since they did not miss out on any payments. Now, the company is planning to sell off a few fashion brands in its portfolio to raise Rs 1,000 crores.
The Group has 5 entities listed on stock exchanges: Future Retail Ltd., Future Consumer Ltd., Future Lifestyle Fashions Ltd., Future Enterprises Ltd. & Future Supply Chain Solutions Ltd.
Since March 2020, FRL, FLF & FSCL have declined around 91% while FEL & FCL have declined around 70%.
Article by Aman Agarwal.
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