Reliance Industries Ltd (RIL) has pulled out of its Rs24,713 crore-deal with Kishore Biyani’s Future Group to acquire its retail business.
The Reliance-Future deal turned controversial and spawned a vicious legal battle. The sale to Reliance was a key reason why Amazon aggressively blocked the sale. The Jeff Bezos-owned retail giant had embedded rights in another 2019 deal with Future Consumer Ltd.
In August 2020, Future Group announced plans to sell 19 companies operating in retail, wholesale, logistics and warehousing segments to Reliance Retail Ventures Ltd (RRVL). RRVL is the holding company of all the retail companies under the RIL group.
In September last year, the National Company Law Tribunal (NCLT) had permitted the Future group to convene meetings of its creditors and shareholders to seek their approval for the transaction.
Between April 20 and 23, shareholders and the secured and unsecured creditors of the Future group had voted on a resolution seeking approval for the deal with the Reliance group. The deal virtually collapsed after it fell short of the 75 per cent threshold for approval from the secured creditors even though shareholders and the unsecured creditors had given their assent.
Reliance Industries and its associate companies have already snapped up closed to 1,000 stores that once housed the Future group’s various retail formats after FRL defaulted on lease repayments, which sent Biyani’s business crashing like a house of cards.
Questions now remain over the legitimacy of those store acquisitions and the manner in which these were acquired — and could add another dimension to the acrimonious, 20-month legal wrangle that has been played out before the courts and other legal forums in India and an international arbitration tribunal in Singapore.
The latest development comes as a blow to Biyani and FRL which will now be hauled through a bankruptcy resolution process after defaulting on their loan repayment obligations. Future Group owes nearly Rs28,000 crore to lenders, of which, FRL owes over Rs17,000 crore.
The other major question is what happens to the leased Future group stores that have been taken over by Reliance.
Starting late February, Reliance had seized control of almost 950 stores that included BigBazaar, Heritage, Easy Day and Fashion@BigBazaar formats. These stores came into the Reliance fold after several cash-strapped landlords had sought its help since FRL could not pay the rent. Following this, Reliance transferred the leases of some of these outlets to its arm-Reliance Retail Ventures Ltd (RRVL) and then sub-let them to Future to operate the stores.
Moreover, SBI — another lender to the Future group — has asked FRL to fix accountability for the store acquisitions by the Reliance group. The banks intend to assert their rights over stock and the fixed assets held in these stores.
Meanwhile, the chairperson and independent director of Future Lifestyle Fashions, Shailesh Haribhakti, has resigned, observing that ‘volatile, complex and unpredictable legal and financial circumstances have taken unexpected turns.’
