Sunday, Jul 03, 2022

After Biyani & Ambani, Bezos Wages War Against Bank Of India For Future Retail Deal

NCLT will hear Amazon’s plea on June 6, while last week it had directed FRL to respond to BoI’s bankruptcy charges.  

Amazon CEO Jeff Bezos.

In the ongoing saga involving Asia’s richest man Mukesh Ambani, American e-commerce giant Amazon and Kishore Biyani’s Future Retail Limited (FRL), the latest twist involves the etailer moving the National Company Law Tribunal (NCLT). Amazon has filed an application pleading with the NCLT not to admit bankruptcy proceedings against FRL. Earlier, Bank of India (BoI) and a Delhi-based company, Foresight Innovations had filed bankruptcy cases against FRL and FEL, respectively.  

NCLT will hear Amazon’s plea on June 6, while last week it had directed FRL to respond to BoI’s bankruptcy charges.  

This move by Amazon comes after it wrote to RBI earlier this week, reiterating its demand for a forensic probe into FRL’s books and actions. Amazon has all along alleged irregularity and collusion between FRL and its lenders that led to the filing of bankruptcy proceedings by BoI.  

Reporting the incident, Financial Express wrote that Amazon in its plea to NCLT has alleged that collusion between FRL and those filing bankruptcy charges against it, claiming that its proceedings will compromise the e-commerce giant’s rights. 

Outlook Business had earlier reported the likelihood of Amazon opposing any move by FRL’s secured creditors to begin insolvency proceedings against Kishore Biyani’s company.  

The saga began two years ago with Mukesh Ambani’s bid to the takeover of Future Group. This entailed the merger of the latter’s five listed entities into one company, called Future Enterprise Ltd (FEL). Reliance had proposed to invest Rs 1,200 crore in FEL as preferential equity (6.09 per cent of post-merger equity of FEL) and Rs 1,600 crore in preferential warrants (option to acquire further 7.05 per cent.) 

The deal would have increased the retail store footprint of Reliance Retail, from 28.7 million square feet to 52.5 million square feet, consolidating its pole position in the market. 

Since the announcement of Reliance Retail’s proposed acquisition of Future Group, Jeff Bezos, another businessman with a reputation for demolishing his rivals across the world, had challenged it at several forums, including the Singapore International Arbitration Centre (SIAC) and the Supreme Court of India, citing the right to refuse to acquire Kishore Biyani’s retail business as per a deal his company signed in 2019 with Future.

While Bezos has a favourable ruling from SIAC and the Supreme Court of India, Ambani meanwhile has walked away from his proposed acquisition. In a stock exchange filing on April 23, Reliance Retail said that it could not implement its $3.4 billion deal to acquire core parts of retail chain Future Group after the latter’s secured creditors rejected the offer earlier this week.  

According to experts, in the entire deal, the behaviour of secured creditors remains a mystery. Laws required a majority of the secured creditors, along with shareholders of the company, to vote in favour of the deal. 
But, as per the exchange filing by Future Group, in the secured creditors' e-voting, 69.29 per cent of the votes of 11 lenders were against the proposal to sell the assets to the RIL subsidiary. Reports suggest that secured creditors were not convinced that RIL would take over Rs 12,000 crore debt on FRL’s books. 

“I am surprised that the secured creditors believed that insolvency is a better way to recover their money rather than agreeing to the deal. What are the assets of FRL that can be sold by creditors to recover an amount as big as Rs 20,000 crore? After profit-making assets have gone to RIL, what will the brand of Big Bazaar do? You know what happened with the brand of Kingfisher after the company was grounded?” asked an expert, requesting anonymity.