Future Retail said on Wednesday it was committed to taking back its stores which were seized by rival Reliance, saying it had been surprised by the move.
Reliance, India's biggest retailer, stunned Future on Feb 25 with its staff suddenly showing up at many of Future's biggest stores to assume control, in what was seen as a de facto takeover.
The takeover occurred even though Future's sparring partner, Amazon.com Inc, says it had legal injunctions in place prohibiting such store transfers.
Reuters has reported that many in Future's management were in the dark about Reliance's plans.
In a statement to Indian stock exchanges on Wednesday, Future said it was committed to take all action to seek "reversal of takeover of the stores" by Reliance.
Future did not elaborate how it would do so, but said it was surprised by the "drastic and unilateral action" taken by Reliance.
Takeover of stores by Reliance Industries has "come as a surprise", said Future Retail to stock exchanges on Wednesday.
Amazon.com Inc. told Supreme Court on Tuesday that truce talks to bury the dispute with cash-strapped Future Retail Ltd. had failed, hours after it published newspapers notices warning the local retailer and its founders that any transfer of assets to Reliance Industries Ltd. would trigger civil and criminal legal action.
On Feb. 25, Reliance, which had not played a public role in the dispute, suddenly took control of hundreds of Future stores, citing non-payment of rent it was due.
Reliance's sudden possession of more than 900 Future stores have landed what some analysts are calling a coup de grace that spoils Amazon's chances of untangling the transfer of Future's assets.
Since the last week of February 2022, Reliance Group has unilaterally terminated the leases and forcefully taken over control of hundreds of Future Retail’s stores, said FRL on Wednesday.
"FRL’s Board has taken strong objection to of such action by Reliance Group and has put Reliance Group to notice to reconsider all other actions initiated over the last few days. FRL’s Board has also notified Reliance Group that assets such as store fixtures, store infrastructure, merchandise, inventory, etc. belonging to FRL and lying inside these stores are hypothecated as security in favour of the FRL lenders. The Board has called upon Reliance Group to ensure that the possession of the secured assets is not transferred and retained unharmed for the benefit of the lenders.
"FRL and its Board remain committed to take all such action as may be necessary to seek value adjustments and reversal of takeover of the stores (leases) by Reliance Group. FRL and its Board is taking steps to arrive at a feasible solution which will be in the interests of all stakeholders," said the Future Group firm in an exchange filing.
Amazon has for months blocked the $3.4 billion sale of Future's retail assets to rival Reliance, announced in 2020, citing a breach of certain contracts. Future denied any wrongdoing, and hopes had risen recently of an out-of-court settlement after Amazon and Future agreed to talks.
On Tuesday, the two sides told India's Supreme Court, which is hearing the dispute, the talks had collapsed, and Amazon took out newspaper ads criticising both Reliance and Future.
Future, which has $4 billion in overall debt, has said it is staring at insolvency if its deal to sell retail assets to Reliance fails.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen 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 offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU