Future Retail’s Lenders Tell Top Court NPA Classification Process Has Started
No interim orders against banks on Future Retail’s petition against possible NPA declaration, top court said.
The Supreme Court of India today declined to grant an interim stay against Future Retail Ltd.'s lenders classifying the company as a non-performing asset. In their affidavit, the lenders have stated that they have begun classifying the account as an NPA.
Some banks had started the process of declaring Future Retail as an NPA, Senior Advocate Rakesh Dwivedi, arguing on behalf of 27 lenders, told BloombergQuint. But the lenders haven't made any progress in the last three days as the matter is being heard by the apex court. "Today, we told the court that banks would now proceed on the notices of default," Dwivedi said.
Arguing for Future Retail, Senior Advocate Harish Salve informed the court that the company wants to engage with the lenders to find a solution and requested the court to post the matter for hearing after a few weeks.
In response, Dwivedi reiterated the lenders' position that Future Retail's plea is not maintainable. The lenders also proposed that bidding of Future Retail's assets should be allowed to enable them to recover their dues.
Dwivedi informed the bench that the dues of the lenders come to a total of around Rs 17,000 crore, and if pushed for a year, the amount will be approximately Rs 25,000 crore.
My suggestion is that FRL assets which we are now entitled for sale be opened for bids between Reliance and Amazon. Whoever is higher above Rs 17,000 crore (dues of the lenders) can take the assets.Senior Advocate Rakesh Dwivedi
Future Retail is staring at being classified as a non-performing asset after it failed to clear dues worth Rs 3,494 crore by Dec. 31. The further 30-day grace period expired on Jan. 29 and the company was served with event of default notices by the banks.
The next logical step after the event-of-default notices is classification as an NPA and application for initiating insolvency, Future Retail had told the court in an earlier hearing. It added that the banks are free to take over the sale process of the small-format stores to recover their dues as it's not injuncted by any order. But a stay must be granted against NPA classification, FRL had argued.
But the 27 lenders, who have been made party to the petition, have opposed this request. Future Retail's lenders include 10 private banks and three foreign banks and no writ petition could lie against them, Dwivedi had told the court. "If the court stays the NPA classification, it may encourage others to come seeking similar reliefs."