Days after the Supreme Court ruled in favour of Amazon and in its long-running dispute with Kishore Biyani-led group on its merger deal with Reliance Limited, the Future group promoters have approached the apex court against the seizure of assets belonging to the company and its founder Biyani.
According to a notification to the exchanges, the promoters comprising of Future Coupons, Future Corporate Resources Pvt Ltd, Akar Estate and Finance Pvt Ltd, Kishore Biyani, Rakesh Biyani and other members of the Biyani family have lodged a Special Leave Petition (SLP) challenging the order passed by the Delhi High Court in March this year. “These proceedings are likely to be listed and heard by the Supreme Court,” the statement stated.
An SLP is a special power bestowed upon the Supreme Court of India to grant leave to appeal against any judgment of high courts.
Typically, advocates have to convince a bench of two judges that there’s something wrong with the judgment of the high court they are appealing from, and that their appeal is “special" enough for the Supreme Court to spend its time hearing it. There could be only two possible outcomes to an SLP: either the matter is dismissed or a notice is issued to the other party. In most SLPs, only the petitioner is represented by a lawyer. Hoping to benefit from this legal remedy, the Future Group has approached the apex court but it remains to be seen if there will be any apparent shifting of the odds in favour of the petitioner. Lawyers TNIE spoke to said the average odds of success for a civil SLP is just under 50%.
Notably, the Delhi High Court had ruled that Biyani and Future had deliberately and willfully violated the Singapore tribunal order and imposed a fine of Rs. 20 lakh on them, payable to the Prime Minister's Relief Fund.
In a major setback for the debt-laden retailer, the apex court too backed Singapore's Emergency Arbitrator (EA) award restraining the Future Group from going ahead with its Rs. 24,731 crore deal with Reliance to sell its retail and wholesale business, and the logistics and warehousing business. The Supreme Court also revived the order on the attachment of assets.
The deal was contested by Amazon which invested Rs. 1,500 crore to buy 49% stake in Future Coupons in August 2019 with an option of buying into the flagship Future Retail after a period of three to 10 years.
Now, Future Group is fighting its final battle for existence and the outcome of the tussle will not just decide the fate of the beleaguered Group, but also its lenders. Biyani's debt issues surfaced from mid-February last year when shares of his listed firms began to tumble down. In mid-May, the Centre exempted all Covid-related debt from the definition of default under the IBC and suspended fresh initiation of insolvency for up to a year -- this was a temporary reprieve.
Meanwhile, lenders have always decided to recast its loans, but have been now assessing its ability to repay once the moratorium ends in September.
As part of the restructuring, Biyani also offered to sell some of its non-core assets to bring in additional funds but the needle hasn't moved so far. The cash-strapped group companies jointly owe around Rs. 21,000 crore to as many as 28 local and foreign banks and the Reliance deal would have fetched the firm Rs.24,713 crore, thereby settling both lenders’ dues and money owed to operational creditors such as vendors.
Without the deal, however, insolvency seems to be the only option and that is bound to hit banks. That's because the company doesn't really have any assets that can be liquidated to recover loans. Bank of India has an exposure of Rs. 5,750 crore to Future group companies, Axis Bank has an exposure of Rs. 1,250 crore, and Bank of Baroda has an exposure of Rs. 750 crore.
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