SC asks Future Retail lenders to take a ‘realistic approach’
A bench headed by Chief Justice NV Ramana, while seeking a response from the banks within two days, urged them to take a “realistic approach” to the matter.
Asking Future Retail’s 27 lenders to take a ‘realistic approach’ while reconsidering their decision, the Supreme Court on Tuesday asked them to explain in two days why they should not be prevented from declaring Kishore Biyani to be in default. for default of payment. to pay their loans amounting to Rs 3,494.56 crore, the deadline for which expired on December 31. He also demanded a response from the banks, including 10 private banks and three foreign banks, for giving FRL more time to repay its loan.
A bench headed by Chief Justice NV Ramana, while seeking a response from the banks within two days, asked them to take a ‘realistic approach’ to the matter and consider the consequences of their action on the Future group. , in debt. He will hear the case next Friday.
FRL last week asked the top court to protect itself from being declared in default, alleging that lenders sent it notices of default earlier this month when they were aware of the impact of the Covid 19 pandemic on its activities / stores and also of the sales freeze. of its small-format stores due to its ongoing litigation with Amazon.
The company fears that in addition to declaring its account as a non-performing asset (NPA), lenders would also publish its names and those of its board of directors as willful defaulters, thereby reducing its credit rating and consequently jeopardizing its ability to raise other funding. .
FRL had missed the due date for payment of Rs 3,494.56 crore to banks and lenders as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetization plans.
Lead lawyer Harish Salve told CS that FRL, being barred from divesting any of its assets, had offered banks to take over its small-format stores and monetize them for loan repayment.
He said that once FRL’s accounts were allowed to be declared as NPAs, the retailer would go into insolvency, which would not only “kill the business” but nothing would survive to fight back. Additionally, Banks will also have to take huge haircuts if the IBC route is taken.
While asking for permission to go ahead with the procedural formalities regarding his Rs 24,713 crore deal with Reliance Retail, he gave a timeline to complete the process before seeking approval from the NCLT.
Lead lawyer Rakesh Dwivedi, representing the lenders, raised an objection to the maintainability of the FRL’s claim, saying the banks had nothing to do with the Singapore arbitration or the FRL-Reliance Retail deal. He further stated that FRL had pretended to be bankrupt and had no money to continue his duties until March next year, therefore, there is no need to give an extension of time.
Meanwhile, the Biyani-led Future Group got big relief as the Supreme Court on Tuesday overturned the three Delhi High Court interim orders that had prevented FRL from selling its retail assets to Reliance Retail until until it decides the Singapore arbitration proceedings initiated by Amazon in 2020. The Supreme Court referred the case to the HC.
Judge JR Midha, in his two orders in February last year, found FRL, Future Coupons and the group’s promoters, including Kishore Biyani, guilty of breaching the emergency arbitrator and ordered the group Future to contact the authorities to recall all the approvals granted to the Future-Reliance agreement.
The dispute between Future Group and Amazon has been going on since October 25, 2020, when Singapore’s EA passed an interim order preventing FRL from continuing its deal with Reliance Retail. Both parties have been embroiled in a legal battle over Future Retail’s decision to sell its retail assets to Reliance Retail for Rs 24,500 crore.