SBI Seeks Accountability From Future Group On Stores Taken Over By Reliance Industries

State Bank of India has written to Future Retail Ltd. seeking accountability on the company's stores taken over by Mukesh Ambani-controlled Reliance Industries Ltd.

India's largest lender sought details on the steps taken by Future Retail with regard to these stores, according to its April 18 letter to the Kishore Biyani-founded retailer. BloombergQuint has reviewed a copy of the letter.

SBI reiterated that the lenders have rights over stock, moveable fixed assets in all the outlets of the company, and in the case of its sale, the entire proceeds will need to be used to settle their dues.

Reliance Projects & Property Management Services Ltd. had taken over 835 sub-leased stores of Future Retail after voiding the lease agreements, the company had informed exchanges in March. These included 342 large-format stores including Big Bazaar, Fashion@Big Bazaar, and 493 small outlets such as Easy Day and Heritage. Reliance Group also took over 112 Future Lifestyle Fashions Ltd. stores.

"You are requested to advise us what steps have been taken by you to safeguard lenders' interest in this matter and efforts taken by you to get back the company's asset taken over by RRPMSL," SBI wrote in the letter addressed to Rakesh Biyani, managing director at Future Retail.

Queries emailed to Future Group on Tuesday morning didn't elicit an immediate response.

"As a policy bank does not comment upon matters relating to an individual account and its conduct," SBI said in a statement to BloombergQuint's queries.

After Reliance took over the stores, Bank of India on behalf of the lenders had issued a public notice warning people against dealing with Future Group's assets. In the notice, the bank had highlighted that lenders have rights over the group's assets owing to the loans they had extended, and any sale without their consent would be subject to legal proceedings.

On April 14, Future Retail informed exchanges that Bank of India had filed an insolvency petition against the company at the National Company Law Tribunal. The petition is yet to be admitted. The move came ahead of a lenders' vote on the scheme of arrangement where Reliance Retail Ventures Ltd. would purchase the retail and logistics businesses of Future Group for around Rs 25,000 crore, which was first announced in August 2020.

The sale has seen inordinate delays because of legal challenges by Amazon Inc. 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 already moved to classify Future Retail as a non-performing asset.

According to a person in the know, the lenders were not sure if the value determined nearly two years ago would still hold since significant deterioration has taken place since. Even if the sale were to be concluded now, lenders are unlikely to recover a large part of their Rs 30,000 crore dues against Future Group.