Resolving Debt: Mukesh Ambani’s Reliance Retail Ventures, Jindal (India) Ltd, and GBTL Ltd Submit Resolution Plans for Future Enterprises
On February 27, Future Enterprises Limited (FEL), led by Kishore Biyani, was admitted for corporate insolvency by the National Company Law Tribunal (NCLT). In response, Reliance Retail Ventures, Jindal (India) Ltd, and GBTL Ltd, owned by Donear Industries, have submitted resolution plans to acquire the debt-ridden company, as mentioned in an exchange filing to the stock exchange.
NCLT’s Order and Auction Plan
The Mumbai bench of the NCLT ordered Future Enterprises to “commence the corporate insolvency resolution process”, paving the way for auction of the firm to recover dues. The resolution plans of the above entities are part of the provisional list of potential resolution applicants disclosed by the resolution professional, Avil Manages.
Verified Claims and Debt Holders
Lenders have submitted verified claims amounting to Rs 12,265 crore, while fixed deposit holders have filed claims totaling Rs 23 crore. Notably, several trusteeship companies, due to Future group firm’s significant borrowings in the form of bonds, have also filed claims. The highest claim of Rs 3,344 crore is filed by Centbank Financial Services, followed by Axis Trustee Services at Rs 1,341 crore and Vistra ITCL (India) at Rs 210 crore.
Other Claims and Dues
The employees have submitted a claim of Rs 2.58 crore, out of which Rs 2.24 crore has been accepted by the Interim Resolution Professional (IRP). In addition, FEL has received statutory dues of Rs 14.75 crore from the State Tax Department and GST authorities. As stated in the exchange filing, the company has also received claims from 803 unsecured financial creditors, 22 secured financial creditors and 10 unsecured financial creditors.
Defaulted Payments and Financial Troubles
Future Enterprises reported default on interest payment of Rs 6.07 crore for its non-convertible debentures on June 21. This adds to the series of payment defaults committed by the Kishore Biyani-led Future Group firm in recent months. The latest default is on interest on issued securities of Rs 120 crore. The default covers the period between December 20, 2021 and June 19, 2022.
Insolvency Proceedings and Future Group Companies
Not only Future Enterprises but four other Future Group companies are undergoing insolvency proceedings. Future Retail Ltd, Future Lifestyles Fashion Ltd, and Future Supply Chain Ltd are at different stages of the insolvency process. The Future Group, already burdened with excessive debt, faced further challenges due to the nationwide lockdown imposed in 2020 in response to the Covid-19 pandemic. The closure of most hypermarket stores located in malls significantly impacted the group’s sales.
Reliance Industries’ Involvement and Legal Challenges
To alleviate their financial situation, the Future Group entered into a deal with subsidiaries linked to Reliance Industries for the complete acquisition of their business in a multi-stage transaction. However, this deal faced legal challenges from ecommerce giant Amazon.com, which claimed a violation of a shareholder agreement it had with the company. In March 2022, Reliance Industries Limited (RIL) took over 900 Future Retail stores due to non-payment of rent. Despite secured lenders initially rejecting the deal with Reliance Industries, the Future Group firms were subsequently admitted for insolvency proceedings.
In conclusion, Mukesh Ambani’s Reliance Retail Ventures, along with Jindal (India) Ltd and GBTL Ltd, have submitted resolution plans to acquire Future Enterprises, which has been undergoing insolvency proceedings. The company faced significant financial difficulties and defaulted on various payments, leading to its admission for insolvency. The resolution process aims to recover unpaid dues and address the claims of lenders, deposit holders, and other creditors. The involvement of Reliance Industries in the acquisition deal has been marred by legal disputes with Amazon.com.
