Future Group Lenders Issue Public Notice To Secure Their Interests As Stores Change Hands
Lenders warn public against engaging with Future Group assets.
Public sector lender Bank of India has warned the public against dealing with assets of Future Retail Ltd, through a newspaper notice. Bank of India is acting as an agent for other lenders, it said in the notice.
In a public notice in prominent newspapers published on Tuesday, the lender said Bank of India being a senior lender to Future Retail had charge over the company's assets. The bank said Future Retail has borrowed money from a group of lenders, which are classified as senior lenders.
"In relation to the same, we would like to inform that all such monies are secured by inter alia charge over the moveable fixed assets and current assets (including receivables, stock, spares, inventories, cash flows) of FRL," the notice said.
Bank of India informed the public that Future Group's assets are still charged to the lenders and that any person dealing with them can be subject to enforcement action by the lenders.
The notice came after Future Retail and Future Lifestyle Fashions had informed exchanges that Mukesh Ambani's Reliance Group entities had sent lease termination notices to the two companies. Future Retail said it received such notices for 835 stores and Future Lifestyle received it for 112 such stores.
"These stores have been historically contributing 55-65% of retail revenue operations of the company. As of now these stores are not operational for stock and inventory reconciliation," both companies said in their respective exchange statements.
Bank of India notice against Future Retail
At this stage the situation at Future Group companies is a complete mess, lenders told BloombergQuint last week. Lenders were pinning hopes on talks between Amazon Inc. and Future Group to lead to a solution. However, on Tuesday, Amazon informed the courts that the talks with Future Group had failed.
A sale of retail assets by Future Group to Reliance Retail Ventures Ltd. announced in August 2020 has been stalled owing to a legal challenge mounted by Amazon.
This is the second major action taken by banks against a Future Group companies. In February, lenders had informed the courts that they had started classifying Future Group companies as non-performing assets in the January-March quarter.
Lenders have so far been steering away from insolvency proceedings against Future Group, since they feel that such a move could lead to further value erosion.
According to a person directly involved in the lenders' discussions with Future Group, insolvency is a strong possibility now, since no other solution has been arrived at. The person spoke on the condition of anonymity.
Apart from the lenders, Amazon has released a newspaper notice warning people against engaging with Future Group, saying that any attempt by Future Retail and its promoters to sell or transfer its retail assets is in violation of an order by the Singapore International Arbitration Centre. It also said any party assisting or cooperating with such fraudulent and contumacious action will be liable for civil and criminal consequences.