Future retail lenders choose Deloitte-backed interim settlement professional to take company to bankruptcy court

Future Retail lenders on Thursday night selected Deloitte India-backed Vijaykumar Iyer as interim resolution professional for sending the Kishore Biyani-promoted hypermarket chain to bankruptcy court, three people familiar with the development said.

The lenders will approach the Mumbai bench of the National Company Law Tribunal next week, seeking to take legal action against the retailer, they said.

It takes a minimum of six months to admit a company to collective proceedings, despite the 14-day ceiling provided by law. If the company is admitted by the NCLT, it will affect the Rs 24,713 crore bid that Reliance Retail made in August 2020 to acquire the company Future Group. Plus, it will allow other potential buyers, like Amazon, to bid for the business. The Future-Reliance is stalled due to legal challenges posed by Amazon.

Meanwhile, IndusInd Bank last week canceled an agreement to sell Future Retail and Asian Hotel (North) loans to Edelweiss Asset Reconstruction Company without specifying a reason. The bank had offered to sell Rs 141 crore of Future Retail and Rs 106 crore Asian Hotel (North) loans by the end of March under a 15:85 structure in which the ARC was to pay 15% upfront and the rest after recovering the money from the borrower.

Deloitte, Edelweiss ARC and IndusInd Bank did not respond until press time Friday to ET’s request for comment.

Lenders decided to approach the NCLT after the company defaulted on Rs 3,495 crore of loans in January under the terms of a one-time restructuring agreement. The key factor influencing their decision was the uncertainty of the takeover, after Reliance took over more than 800 of Future Retail’s 1,500 store sites over a month ago, citing non- payment of rents.

The decision to approach the NCLT comes ahead of a meeting of creditors scheduled for April 21 to vote on the plan of arrangement proposed by Reliance Industries and Future Group on the multi-step sale of Future’s assets.

Amazon and the Future Group have filed petitions and counter-petitions regarding the deal in several legal forums. Amazon says the terms of its 2019 investment in a venture promoting Future Retail gave it first right of refusal in any sale of a stake in the Indian retailer and also prohibited it from selling a stake to Reliance entities.

The outcome of the proceedings at the Singapore International Arbitration Center, which will now resume its hearing on the validity of the Future-Reliance agreement, will also affect the recovery that the lenders would make.

The lenders had invited bids from insolvency practitioners to submit a technical and financial bid by March 29.

Vijaykumar Iyer has been a resolution professional for over 10 companies including Banani Cement, Bhushan Steel and Aircel Group Insolvency, Dishnet Wireless and Aircel Cellular.

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