The Supreme Court (SC) has agreed to hear a new petition from Future Retail Ltd (FRL), which seeks to quash lenders’ letters threatening to initiate insolvency proceedings against the company.
In a statement to the apex court on January 27, advocate Mukul Rohatgi pled that FRL’s deal to sell Rs 25,000 crore worth assets to Reliance Retail is “virtually stalled” due to litigations across India, initiated by US-based e-commerce giant Amazon, the Times of India reported.
FRL "finds itself in a peculiar position where it wishes to comply" with its obligations to lenders, but "the litigation with Amazon is effectively preventing it from doing so", the filing said as it sought quashing of default notices from its lenders.
He added that the company has been unable to monetise its small format stores and other assets due to “events beyond control” since the deal was stalled. FRL also requested the court to direct lenders to withdraw their notices.
In its petition before the Supreme Court, FRL has also requested the court to issue an order or direction to its lenders to "extend the "cure period"/ "review period" of 30 days under the Framework Agreement" and relax the timeframe.
In response to request for an “urgent hearing”, a bench headed by Chief Justice of India (CJI) NV Ramana said it has reserved its orders on a number of issues related to the litigation between Amazon, Future Coupons and Future Retail over sale of the retail business to Reliance Retail.
“We will have to hear arguments from Amazon, apart from the banks which have sent the insolvency notice,” Ramana said, while allowing Future to submit a copy of their fresh petition on Amazon.
Earlier on January 25, FRL moved the apex court to avert insolvency proceedings over missing a loan repayment deadline, even as its independent directors rejected an Amazon-supported offer to sell the company businesses at less than a third of what Reliance is offering.
FRL is India's second-largest retailer and operates multi-brand retail chains such as Big Bazaar, Easyday and Heritage. It defaulted on a Rs 3,494.56 crore payment to lenders due by December 2021 and had sought a 30-day grace to resolve this. The company moved the apex court for relief from insolvency proceedings after being unable to source the money.
Amazon opposed the Future-Reliance deal saying it violates a 2019 pact under which it invested $200 million in an FRL arm. This has been backed by a Singapore arbitrator and is pending in the courts. Amazon is contesting the deal through its 49 percent stake in Future Coupons, which is a shareholder in FRL.
(With inputs from PTI)Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.