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Future Retail has written a letter to Reliance Industries asking it to return the assets and inventory from the stores the latter had taken over recently. Reliance had taken over more than 900 stores out of 1,500 stores last month after Future Retail failed to pay the lease amount.
According to a top official in Future Retail, “The lenders have the first charge over the assets, and the inventory is perishable, hence, Future Group’s management has asked Reliance to hand over the assets and inventory from the stores that were being operated by Future Retail’s Big Bazaar.”
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After the abrupt takeover of the possession of stores in the last week of February, Future Retail had said that these stores contributed to over 50 per cent of the company’s revenues. On the other hand, the lenders, too, had issued a public notice informing that they had ‘secured charge’ on the moveable fixed assets and current assets (including receivables, stock, spares, inventories, cash flows) of FRL.
Reliance has defended its decision to take over the stores, in a recent letter, stating that it had to secure the dues owed by Future Retail. Reliance stated that the lenders were secured creditors, and if they planned to drag Future Retail to the NCLT or Debts Recovery Tribunals, Reliance would not have an opportunity to recover its monies.”
Future Group and Reliance Industries did not respond to BusinessLine’s query.
According to reports, Reliance has given financial support of ₹4,800 crore comprising ₹1,100 crore of unpaid lease rentals and ₹3,700 crore of working capital.
In August 2020, Reliance had agreed to buy out assets of multiple companies of Future Group. It had decided to buy the assets for the logistics, retail and wholesale businesses of the Kishore Biyani owned company among others for a valuation of ₹24,713 crore.
However, Amazon, which had invested in one of the Future Group companies in 2019 for ₹1,400 crore had opposed this deal. It had dragged Future Group’s companies into arbitration on grounds that it violated an agreement in which Reliance was a restricted party.
After the e-commerce giant won an interim award in its favour, it moved to Indian courts to seek remedy. This was countered by Future Group. Since then there are multiple court cases that are being heard in different courts.
This, according to Future Group, which has been making losses for at least five quarters now has deterred the company’s financial strength further. The company has defaulted payments to lenders and vendors among others.
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