InvestorQ : Is it true that Future Retail is being referred to insolvency resolution?
sarah Leo made post

Is it true that Future Retail is being referred to insolvency resolution?

Rashi Mehra answered.
11 months ago

Now, there is not much of choice with a series of defaults and FRL being left with no funds at all. Lenders of FRL appointed Vijaykumar Iyer as the interim resolution professional for the insolvency resolution of FRL. Now lenders will approach the NCLT Mumbai to initiate proceedings. If FRL gets admitted by the NCLT, it is likely to have a bearing on the Rs.24,713 crore merger deal with Reliance, the status of which is still not too clear.

Lenders had no choice but the approach the NCLT after FRL defaulted on Rs.3,495 crore of loans in January under the one-time restructuring deal. Now, Reliance has already taken control of more than 800 of Future Retail’s 1,500 stores citing non-payment of rentals. This virtually makes FRL into a shell company with nothing but unsustainable debts in its books. The merger deal had been inordinately delayed due to the objections of Amazon.

The story is not yet over. In fact, the outcome of proceedings at the Singapore International Arbitration Centre (SIAC) will now resume its hearing. This is about the validity of the Future-Reliance deal. Banks are worried that they may already be too late as Reliance has already stolen the thunder by taking possession of all the stores against rental dues of the Future group. Now the banks are virtually left with zero collateral against huge loans.

Vijaykumar Iyer has been a resolution professional for more than 10 companies, including Banani Cement, Bhushan Steel, and the group insolvency of Aircel. The big question is what are the assets that are really left with FRL and if so what is the kind of haircut that banks will have to take. It will obviously be huge.