Indian banks to start debt recovery proceedings against Future Retail: report

Indian lenders are expected to initiate debt collection proceedings against Future Retail this week to protect their interests after rival Reliance unexpectedly took over some of the retailer’s stores, two bankers told Reuters.

Future Retail, hit by the pandemic, is struggling to repay its debt and is fighting a bitter legal battle with the American distribution giant Amazon. That battle successfully blocked a $3.4 billion sale of its retail assets to India’s biggest retailer Reliance, citing breach of certain contracts.

Future denies any wrongdoing. But Reliance Industries suddenly took over hundreds of Future stores late last month, citing non-payment of rent, after assuming numerous leases held by cash-strapped Future.

Public lender Bank of Baroda will be the first to take Future to the Debt Recovery Tribunal (DRT) and is expected to file the paperwork this week, the two bankers said.

“We are taking this action as a last resort because we want to protect ourselves in this legal fiasco,” said one of the bankers directly involved in the case. “Going to DRT will ensure Reliance can’t make another sudden move.”

Other lenders are likely to follow suit, the second banker with knowledge of the matter told Reuters.

Future Retail and BoB did not immediately respond to requests for comment.

Future Group as a whole has more than $4 billion in debt and lenders have already started classifying loans as non-performing assets (NPA) this quarter.

The lenders are also likely to subsequently file a case in the National Company Law Tribunal (NCLT) which handles corporate insolvency cases, the two bankers told Reuters. Future and Amazon are battling it out on multiple levels, including in India’s Supreme Court.

Given the legal complexity of this case, approaching the DRT first is likely to help banks quickly seize, seize and sell Future’s assets, instead of going after the whole company. of NCLT, said Ketan Mukhija, a partner at Link Legal.

“It’s a very strategic and tactical call (by the banks),” he said.

This story was published from a news feed with no text edits. Only the title has been changed.

To subscribe to Mint Bulletins

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now!!

About Mary Moser

Check Also

Stefon Diggs stars in Marvel commercial [WATCH]

Stefon Diggs stars in Marvel commercial [WATCH]

Buffalo Bills quarterback Josh Allen isn’t just an NFL player, he’s a celebrity. The four-year …