The lenders also warned the public not to open an account with Future Retail except under applicable law and where permitted by the lenders.
Lenders to poor retailer Future Retail (FRL) moved on Tuesday to protect their loans in the event of a transfer of the company’s assets. Led by Bank of India, they issued a notice to safeguard their interests, warning that such transactions may also be subject to chargebacks available under the law, including those for preferential transactions and fraud.
According to sources, the banks are investigating the DRT (Debt Recovery Tribunal) route, which they believe could be a better option than the Corporate Insolvency Resolution Process (CIRP).
“… the lenders hereby inform anyone that all movable fixed assets and current assets including receivables, inventories, spare parts, inventories, cash flows as at date are subject to a fixed fee in favor of the lenders, and any person they will at all times transact in such assets, subject to the charge of the lenders, which may be sued and enforced against any such person dealing in such assets, unless such transactions have taken place in the ordinary course of business in retail by FRL,” the banks said in the note.
The lenders also warned the public against opening any account – deposit accounts, current accounts, safe deposit boxes or lockers – for Future Retail, except under applicable law and where permitted by the lenders.
Future Retail missed the December 31, 2021 deadline to repay its lenders Rs 3,494.56 crore under the terms of a one-time restructuring plan (OTR) approved by the Kamath Commission. In January 2022, a consortium of 27 banks informed the Supreme Court that they had begun classifying Future Retail’s accounts as non-performing assets.
Reliance Retail, a subsidiary of Reliance Retail Ventures, has moved to end the sublease of 947 Future Group stores after they were acquired last month. The stores had been sublet by Reliance to Future, which defaulted on rent payments.
Meanwhile, the legal battle between Amazon and Reliance over Future Group’s assets continues. While hearings are underway in the Supreme Court, Amazon said in a statement Tuesday that any attempt by Future Retail and its promoters to sell or transfer its retail assets would result in civil and criminal penalties.
Future Retail’s business had come under pressure during the pandemic and banks had responded by providing an OTR deal to the company under the terms of the Kamath commission report. Lenders had expected Reliance Retail to have completed the acquisition of Future Group’s retail assets by the time the repayment schedule went into effect. That plan failed amid pending legal proceedings and Future Retail missed the December 2021 deadline to repay its lenders.
This post Banks move to protect their interests as future retail assets change hands
was original published at “https://www.financialexpress.com/industry/banks-move-to-secure-their-interests-as-future-retail-assets-change-hands/2462152/”