Supreme Court Agrees To Hear Future Retail Petition Against NPA Deadline
Future Retail requests top court to extend the grace period for clearing of dues.
The Supreme Court of India has agreed to hear Future Retail Ltd.'s petition opposing its likely classification as a non-performing asset.
The petition by the company was filed on Tuesday and mentioned for urgent hearing by Senior Advocate Mukul Rohatgi before the bench presided by Chief Justice of India Justice NV Ramana.
Rohatgi informed the bench that the company was staring at an NPA classification and requested the bench to take up the case on Jan. 31.
The specific challenge by Future Retail is to three event of default notices issued by its lenders this year. The company has made the Reserve Bank of India and 25 banks party to the petition.
Future Retail has requested the top court to direct the lenders to:
Set aside the three event of default notices.
Restrain the lenders from classifying Future Retail as an NPA.
Extend the timeline for monetisation of the small format stores under the restructuring agreement.
Extend the grace period for clearing its dues.
Lenders Threatening Insolvency Proceedings: Future Retail To Supreme Court
According to the portions of filing viewed by BloombergQuint, Future Retail has told the court that events outside its control, such as the injunctions issued as part of the arbitration proceedings initiated by Amazon.com NV Investment Holdings, have impeded its ability to comply with the timelines for sale of small-format stores as part of the one-time resolution framework agreement.
The injunctions refer to the ongoing legal dispute via which Amazon has sought to block FRL's Rs 27,513-crore deal with Reliance Retail Ventures Ltd. on grounds it has certain rights in the Future Group company.
Future Retail has told the court that the notices threaten to initiate insolvency proceedings against the company if the payment of Rs 3,494 crore is not made within the 30-day grace period, which expires on Jan. 29.
In a notification to the exchanges on Jan. 1, Future Retail stated it had missed paying Rs 3,494 crore worth dues to various consortium banks and lenders. This was a key requirement under the one-time resolution plan, which lenders had approved in early 2021. Future Group was provided with a 30-day grace period, according to the exchange notification.
Failing this payment, the restructuring plan would become infructuous and the account would be classified as an NPA.
The company has told the top court that as part of the restructuring agreement, it was required to make the payment from the proceeds of the monetisation of its small-format retail business, which includes the brands Easyday Club and Heritage Fresh. But it hasn't been able to due to the injunction by the Singapore-based arbitration tribunal.
Further, Future Retail argued that on Jan. 1, lenders had agreed to waive their right to declare the failure to monetise small-format stores as an event of default. Despite this, the company said, the notices threatening initiation of insolvency were sent.
The apex court will hear the matter next on Jan. 31.