Supreme Court Agrees To Hear Future Retail Petition Against NPA Deadline

The Supreme Court of India has agreed to hear Future Retail Ltd.'s petition opposing its likely classification as a non-performing asset.

Lenders Threatening Insolvency Proceedings: Future Retail To Supreme Court

According to the portions of filing viewed by BloombergQuint, Future Retail has told the court that events outside its control, such as the injunctions issued as part of the arbitration proceedings initiated by Amazon.com NV Investment Holdings, have impeded its ability to comply with the timelines for sale of small-format stores as part of the one-time resolution framework agreement.

The injunctions refer to the ongoing legal dispute via which Amazon has sought to block FRL's Rs 27,513-crore deal with Reliance Retail Ventures Ltd. on grounds it has certain rights in the Future Group company.

Future Retail has told the court that the notices threaten to initiate insolvency proceedings against the company if the payment of Rs 3,494 crore is not made within the 30-day grace period, which expires on Jan. 29.

In a notification to the exchanges on Jan. 1, Future Retail stated it had missed paying Rs 3,494 crore worth dues to various consortium banks and lenders. This was a key requirement under the one-time resolution plan, which lenders had approved in early 2021. Future Group was provided with a 30-day grace period, according to the exchange notification.

Failing this payment, the restructuring plan would become infructuous and the account would be classified as an NPA.

The company has told the top court that as part of the restructuring agreement, it was required to make the payment from the proceeds of the monetisation of its small-format retail business, which includes the brands Easyday Club and Heritage Fresh. But it hasn't been able to due to the injunction by the Singapore-based arbitration tribunal.

Further, Future Retail argued that on Jan. 1, lenders had agreed to waive their right to declare the failure to monetise small-format stores as an event of default. Despite this, the company said, the notices threatening initiation of insolvency were sent.

The apex court will hear the matter next on Jan. 31.