Even as Future Retail’s (FRL) lenders have started classifying its account as an NPA after it missed the deadline to pay certain loan dues, the Supreme Court on Thursday refused to pass any interim orders restraining banks from taking any coercive action.
While the 27 banks told the apex court that they have started classifying FRL’s accounts as NPAs, they asked the SC to direct the two companies — Amazon and Reliance Industries — to bid for FRL’s assets to facilitate recovery rather than take up long bankruptcy route to recover their dues. “Entire assets of FRL, which we are entitled to sell, can be subjected to an open bid. Let the two cash-rich suitors bid for it, why litigate for one year for an uncertain outcome about who will get it,” senior counsel Rakesh Dwivedi, appearing for the banks, suggested.
FRL had late last month moved the apex court seeking protection from being declared a defaulter after it missed the due date for payment of Rs 3,494.56 crore to banks as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetisation plans. The company had last year entered into a one-time restructuring scheme for Covid-19 hit companies with a consortium of banks and lenders and was to discharge “an aggregate amount of Rs 3,494.56 crore” on or before December 31, 2021.
A bench led by Chief Justice NV Ramana, after hearing all the three parties, reserved its order on whether FRL can be given time to arrive at a resolution with its lenders, which have an exposure of Rs 17,000 crore to the company and whether procedural formalities before NCLT can be permitted for the proposed Rs 24,713-crore asset sale deal between FRL and Reliance Retail.
While FRL senior counsel Harish Salve also sought two weeks to resolve the issue of clearing dues with its 27 lenders, which include 10 private and three foreign banks, lenders told the judges that their contract with FRL is the only one that involves depositors’ money. If the Rs 17,000-crore exposure to FRL is pushed by a year, it will grow to Rs 25,000 crore, they said, adding that bidding was the only “sure shot” method of recovering their money.
While stating that banks have no connection with the Amazon dispute, Dwivedi argued that if Amazon wins the case, the banks would only get `7,000 crore, but if the Rs 25,000-crore Reliance deal is allowed to go through, the lenders can recover their entire money.
Salve agreed with Dwivedi that the interests of public depositors should take precedence if the Reliance deal fructified, not only will the “banks be repaid in full” but the jobs of its 30,000 employees will be saved.
Amazon’s senior counsel Gopal Subramanium also submitted that the e-commerce firm would like to sit across the table with banks and find a solution.
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