Amazon may ask for willful defaulter tag for the future

The e-commerce giant’s decision is aimed at putting pressure on banks to take action against Future Retail after it defaulted on payments last year despite a loan restructuring.

The move comes after entities linked to Reliance Industries Ltd took over hundreds of department stores run by Future Retail after terminating their leases. Lenders of Future Retail are not left with enough assets to recover the loans given to the Kishor Biyani-controlled company, with Reliance taking over stores at valuable sites.

Reliance’s acquisition of Stores comes after Amazon blocked Future Group’s plan to sell its retail and wholesale assets to Reliance Industries. 24,713 crores. The US company claims a clause in an investment agreement with Future Group, which prevents the latter from selling assets to specified entities, including Reliance Industries.

One of the two people, requesting anonymity, said, “Amazon thinks the lender will act decisively with the intervention of the banking regulator.”

Spokesmen for Amazon, Future Group and Reliance Industries did not respond to emails seeking comment.

Mint reported on February 14 that Future Group’s lenders had agreed to halt the sale of Future Retail’s small-format stores until the top court ruled on the transfer of assets between Amazon and Future Group founders to Reliance Industries. He did not pass his order in the matter of sale.

“What is worrying from Amazon’s point of view is that despite the case pending in the Supreme Court and the Singapore International Arbitration Center’s October 2020 order restraining Future from taking any steps to segregate any assets without Amazon’s consent Reliance started taking sub-lease premises. missing for the future 2,300 crore repayment to a subsidiary of Reliance, with which Future entered into a sub-lease agreement to run Big Bazaar stores in March last year,” said the second person requesting anonymity.

According to Amazon, the acquisition will significantly damage Future Retail’s ability to repay banks. “Future has already defaulted on repayment. This entire arrangement of lease transfer appears to be pre-planned and clearly amounts to willful default by Future Group. RBI’s intervention has now become imperative,” the person said.

In its annual report for the year ended 31 March, Future Retail stated that “the company does not face a liquidity risk with respect to lease liabilities as the current assets are required to meet the liabilities towards meeting the lease liabilities obligations”. for and when they are due.” As per the rules, an entity which is unable to repay the loan due to willful inability to repay the loan or due to their acts, is called a willful defaulter. Under the current laws, willful defaulters are not legally allowed to enter or become part of the same type of business again. They have also been denied access to institutional finance.

On January 25, Future Retail filed a non-maintenance writ before the Supreme Court against the RBI and others, seeking relief with respect to the banks and the RBI declaring the company as a non-performing asset and transfer. asked for additional time. Its retail assets in the context of one-time restructuring solution framework for COVID-19 related stresses.