Additional Security Offered By Future Group Not Commercially Viable, Says UBS

UBS AG, seeking to recover investments in the debentures of Future Group subsidiary Rural Fairprice Wholesale Ltd., said additional security proposed by the Kishore Biyani controlled conglomerate is “not commercially viable”.

The Future Group subsidiary had proposed additional security in the form of a charge on an immovable property as collateral against the debentures issued in favour of UBS and other investors.

This comes after the Bombay High Court had suggested that the Future Group should consider providing additional security in favour of debenture holders. It had directed that the proposed additional security should be enforceable by the debenture holders “without much hindrance”.

A bench headed by Justice NJ Jamdar, who heard the case through video conferencing, directed the Future Group to communicate any decision about providing additional security to UBS before May 18. The court will now hear the matter on May 19.

On April 17, the Supreme Court had dismissed a special leave petition filed by UBS AG against a Bombay High Court order that restrained IDBI Trusteeship Services from selling shares of Future Retail Ltd. pledged against debentures issued by a group entity.

The issue stemmed from Future Group's inability to make payments against debentures issued by Rural Fairprice Wholesale Ltd. in 2018 and 2019 to raise money from UBS and other investors. Another group company, Future Corporate Resources Pvt. Ltd., offered shares of the listed Future Retail as a collateral against the debentures.

IDBI Trusteeship, the debenture trustee, had issued a notice to Rural Fairprice and the Future Corporate Resources to sell the pledged Future Retail shares after the group defaulted on payments.

The Future Group then moved the Bombay High Court citing a plunge in share prices after the Covid-19 outbreak. The court had restrained the debenture trustee from selling the shares till the disposal of the matter.