Lenders to cash-strapped retailer Future Retail (FRL) on Tuesday moved to protect their loans in the event of any transfer of the company’s assets. Led by Bank of India, they issued a notice to secure their interests, warning that any such dealings could also be subject to clawbacks available under the law, including those for preferential transactions and fraud.
According to sources, the banks are exploring the DRT (Debt Recovery Tribunal) route, which they believe could be a better option than the Corporate Insolvency Resolution Process (CIRP).
“ … the lenders hereby notify one and all that all moveable fixed assets and current assets including receivables, stock, spares, inventories, cashflows as on date are subject to a fixed charge for the benefit of the lenders, and, any person dealing with the them shall transact with such assets subject at all times to the charge of the lenders which can be pursued and enforced against such person dealing with these assets unless such dealing has occurred in the ordinary course of retail trading by FRL,” the banks said in the notice.
The lenders also warned members of the public against opening any account — deposit accounts, current accounts, safe deposit accounts or lockers — for Future Retail, except on account of applicable laws and if permitted by the lenders.
Future Retail missed its December 31, 2021 deadline to repay its lenders Rs 3,494.56 crore under the terms of a one-time restructuring plan (OTR) approved by the Kamath committee. In January 2022, a consortium of 27 banks informed the Supreme Court they have started classifying Future Retail’s accounts as non-performing assets.
Reliance Retail, a subsidiary of Reliance Retail Ventures, has moved to terminate sub-leases of 947 Future Group stores after taking them over last month. The stores had been sub-leased by Reliance to Future, which defaulted on rental payments.
Meanwhile, the legal battle between Amazon and Reliance to take over Future Group’s assets continues. As hearings go on in the Supreme Court, Amazon on Tuesday said in a notice that any attempt by Future Retail and its promoters to dispose of or transfer any of its retail assets would attract civil and criminal action.
Future Retail’s operations had come under pressure during the pandemic and banks had responded by extending an OTR deal to the company under the terms of the Kamath committee report. Lenders had expected Reliance Retail to have completed the takeover of Future Group’s retail assets by the time the repayment schedule kicked in. That plan failed amid the ongoing legal proceedings and Future Retail missed its December 2021 deadline to repay its lenders.
