Future Retail Loses Reliance, Adani From The Bidder’s List

The lenders of the insolvent Future Retail Limited got six offers from potential purchasers by May 15, the deadline for submitting resolution plans.

According to media reports, despite being named to the final list of 48 companies, prominent corporate giants like Reliance, Jindal Ltd, and Adani Group did not submit bids.

As per FRL’s regulatory filing, the company is “in possession of resolution proposals/bids from 6 prospective candidates for resolution as a reply to the Call for Resolution Plans.” Future Retail has a debt of over Rs 30,000 crore and is undergoing the CIRP.

According to media reports, despite being named to the final list of 48 companies, prominent corporate giants like Reliance, Jindal Ltd, and Adani Group did not submit bids.

The deadline for submitting resolution plans for the 48 enterprises on the final list of ‘EPRA’ was May 15, 2023. This occurred even though FRL lenders issued revised EoIs and invited new bids after separating their assets into clusters.

Earlier that day, on April 24, FRL creditors released a final list of 48 entities, including Reliance, Jindal Ltd, and Adani Group, that were potential prospective resolution applicants for purchasing the business.

Sahara Enterprises, Greentech Worldwide, J C Flowers Asset Reconstruction, and Universal Associates are among the other companies that have made expressions of interest. This time, the Committee of Creditors offered two possibilities. In the first, firms could bid on the purchase of FRL as a whole.

Under the following option, FRL’s business was divided into five clusters, from which they could choose any one or a combination. Last month, the Mumbai-based NCLT panel granted FRL a 90-day extension until July 15, 2023, to complete the CIRP.

FRL’s creditors requested new EoIs on March 23, 2023, in which prospective purchasers could submit proposals for the debt-ridden corporation “as a continuing operation or single cluster or an amalgamation of clumps of its assets” after it failed to secure a plan of action in over four months.

Previously, it had gotten EoIs and confirmed 11 potential applicants, notably Reliance as well as April Moon Retail. However, they were unable to reach an agreement despite two extensions to the submission date.

Under the labels Big Bazaar, and Foodhall, FRL operated numerous retail formats in the hypermarket, supermarket, and home segments. At its height, FRL had over 1,500 locations in approximately 430 cities.

Following debt defaults, FRL’s lender, Bank of India, initiated the CIRP. EoI was requested from potential buyers on October 4, 2022, following the Insolvency and Bankruptcy Code.

According to the source, Space Mantra has made the biggest proposal, while five other businesses have made bids for other parts of the corporation. Pinnacle Air, Lehar Solutions, and Sarvabhishta e-waste management are among them.

Future Retail won permission from the bankruptcy judge last month to extend the deadline for completing the resolution procedure by another 90 days, to July 15. The previous deadline was April 16th.

According to a stock exchange report, the Mumbai bench of the National Company Law Tribunal (NCLT) permitted the omission of 90 days from the CIRP.

It was one of 19 Future group firms in retail, wholesale, logistics, and warehousing that were due to be given to Reliance Retail as a result of a Rs 24,713 crore deal revealed in August 2020.

However, lenders had turned down Reliance’s buyout proposal for the 19 Future group businesses, including FRL, due to Amazon’s legal challenge.

SEBI, the stock exchange regulator, sought a forensic audit of FRL’s records for the financial years 2019-20, 2020-21, as well as 2021-22 in August of last year.

Earlier this month, according to persons familiar with the situation, Reliance, Adani, Torrent, Vedanta, and Jindal Power were among 14 entities interested in acquiring Gujarat-based Bhadreshwar Vidyut, which is currently bankrupt.

The insolvency tribunal allowed landlords requesting the closure of shop spaces owned by Future Retail Ltd, partial relief. The court has directed that the resolution specialist Vijayakumar Iyer enter the premises if required and inventory the things kept on a mutually convenient date.

The problem of the premises arose when various landlords sought restoration of ownership of their buildings owned by Future Retail in the insolvency court. According to them, when it declared bankruptcy in 2022, the majority of the stores were closed and left unmaintained.

They claimed that many of the company’s commodities, including some perishable items, remain stored on the property, potentially causing lasting damage to these assets.

According to documents, nine firms linked with Future Retail are seeking over Rs. 2,100 crores in operating expenses from the indebted corporation. It accounts for about a quarter of the total operational payments under its insolvency settlement.

Future Consumer and Future Specialty Retail are among them. The retail sector has been bankrupt for around ten months and has received claims from operating creditors totaling 9,306 crores.

Under the Insolvency and Bankruptcy Code (IBC), operating creditors are entities that owe money to a firm for goods or services they provided.

The deadline for resolution candidates to submit formal bids for Kishore Biyani’s company, which went into bankruptcy after a transaction with Reliance Industries fell through in April 2022, was on Tuesday.

Vijay Kumar Iyer, a resolution professional supported by Deloitte India, received 49 expressions of interest. However, the majority of applicants who responded to the EoIs were junk dealers.

Iyer acknowledged Rs 17,511 crore for financial creditors’ claims. “But it is doubtful that they will get even 5% of their dues,” one of the financiers added.
According to the sources, the resolution expert has yet to open the plans that were submitted from these six bids.

Problems with the Future group began in March 2020 with a statewide lockdown. The majority of malls in which Future stores were situated remained closed.

Following that, it was unable to reach an agreement with Reliance Industries for selling its wholesale and retail operations in a slump sale after guaranteed lenders decided against the plan of arrangement.

Lenders stated they had no idea how much money Reliance will pay them after it took over over 900 large-format future shopping outlets. Due to Future Group’s failure to pay rent, Reliance acquired these outlets in stages beginning in 2022.

Iyer has confessed to claims made by offshore bondholders totaling Rs 4,109 crore, who account for 23.4% of the vote. The lawsuit was filed at the request of the offshore bondholders’ trustee, Bank of New York Mellon.

Bank of Baroda, for example, has a validated claim of Rs 2,143 crore, which equates to 12.2% of the vote. UBI has a total of Rs 1,894 crore exposure, which equates to 10.8% of its voting rights.

Future Retail manages some of India’s most popular retail chains. It instills trust in customers through innovative services, high-quality items, and low pricing that enables them to live a better life every day.

Future Retail strives to satisfy its customers by adjusting shop formats to alter Indian lifestyles and customizing items and services to their preferences. The company owns and operates some of the most famous hypermarket and house solutions retail formats in India.

Its multi-format retailing strategy caters to the numerous consuming needs of a diverse cross-section of Indian customers across values and lifestyle segments. Through new client interaction efforts, the company intends to keep its focus on expanding consumption demand.

The company’s operations were well-capitalized to drive pure retail growth acceleration. The company believed that the Indian consumer story was intact and that a combination of demand and investment-driven growth will drive its success.

Proofread & Published By Naveenika Chauhan