Future Lifestyle Chairman Resigns After Creditors Reject Reliance Deal

Future Lifestyle Fashions Ltd.'s chairman and independent director Shailesh Haribhakti has tendered his resignation, a day after secured creditors rejected a scheme that would've paved the way for a mega deal with Mukesh Ambani's Reliance Retail Ventures Ltd.

"Many alternative recommendations made by the board and all efforts of the board to find a solution have not met with the implementation impetus," Haribhakti said in his resignation letter, uploaded on the stock exchanges on Saturday.

"Consequently, as chairperson of the board, I feel constrained to act further and submit my resignation as a member of the board with immediate effect to enable the promoters and investors to find out suitable alternative, who would be able to find a solution for the company."

On Friday, secured creditors of Future Group's three flagship companies—Future Retail, Future Lifestyle and Future Enterprises—rejected a reorganisation scheme that would've conslidated retail assets and merged them with the Ambani's retail unit. At Future Lifestyles, 82.75% of the secured creditors were against the scheme.

BloombergQuint had reported on Thursday that three major lenders, including State Bank of India, Bank of India and Union Bank of India had rejected the sale of retail assets of Future Group to Reliance Retail Ventures Ltd. And that other lenders were likely to have followed suit.

Haribhakti said that he will be happy to provide any further advise and support to the company and its management, should they need it.

The Story So Far

In September last year, the National Company Law Tribunal had allowed Future Retail and other group companies to convene meetings of shareholders and creditors to vote on consolidation of group entities.

The meetings were to seek approval for the scheme of arrangement between 20 Future Group companies, including six listed, with Reliance Retail Ventures Ltd., and Reliance Retail and Fashion Lifestyle Ltd. This would mean Reliance Retail would purchase the retail and logistics businesses of Future Group for around Rs 25,000 crore, which was first announced in August 2020.

But the deal has been delayed on account of legal challenges by Amazon.com NV Investment Holdings LLC, an investor in a Future Group entity.

Over this period, Future Group’s debt piled up, with viability of its operations coming under question. A one-time restructuring scheme, implemented last year failed because Future Group companies were not able to meet repayment milestones. Lenders have since moved to classify Future Retail as a non-performing asset.

Meanwhile, in February this year, Reliance Retail took control of 200 Big Bazaar stores after the Future Group defaulted on payment for renewing the lease. In March, Future Retail said it has received termination notices from Reliance in relation to another 835 sub-leased properties—342 large format stores, including Big Bazaar, Fashion@Big Bazaar, and 493 small format stores such as Easy Day and

Future Lifestyle also received termination notices on 112 sub-leased properties from Reliance Retail due to pending dues. That included 34 Central stores and 78 Brand Factory outlets.