Connect with us

Headlines Of The Day

Amazon to continue arbitration against Future Retail

Amazon will continue its arbitration against Future Group despite the latter’s ₹24,713-crore deal with Reliance Industries being called off. A source told BusinessLine that Amazon had no reason to not continue the arbitration against Future Retail.

According to the e-commerce giant, Future Group had violated its 2019 agreement which merited an arbitration.

This comes even as nearly 70 per cent of the secured creditors rejected the Reliance- Future Retail deal. The results of the shareholders’ voting that took place on Wednesday were disclosed by Future Retail on Friday. Reliance Industries too, said it could not continue the deal with Future Retail.

“Whether the deal has been accepted or rejected by the lenders and has been called off by Reliance does not make a difference anymore, Future Group manipulated the agreement,” said a source close to Amazon

Despite calling off the deal with Future Retail, Reliance Industries still walks away with 947 small and large format stores that were once occupied by Future Retail stores.

At loggerheads
Amazon and Future Group have been at loggerheads for over 18-months now. In August 2020, Reliance had agreed to buy out assets of multiple companies of Future Group. It had decided to buy the assets for the logistics, retail and wholesale businesses of the Kishore Biyani–owned company, among others, for a valuation of ₹24,713 crore.

However, Amazon, which had invested ₹1,400 crore in one of the Future Group companies in 2019, had opposed the deal. It had dragged Future Group’s companies into arbitration on grounds that it violated an agreement in which Reliance was a restricted party.

After the e-commerce giant won an interim award in its favour, it moved Indian courts to seek enforcement of the award. This was countered by the Future Group. Since then, multiple cases have been filed in different courts by both sides. These cases may be withdrawn now since the deal in question itself is in jeopardy.

The litigations, according to Future Group that has been making losses for at least six quarters now, have further eroded the company’s financial strength. The company has defaulted on payments to lenders and vendors, among others. The company’s net worth has eroded completely.

On the other hand, the lenders are now miffed by the fact that Future Retail managed to rid of more than 60 per cent of its store leases. This has reduced Future Retail’s valuation drastically.

Lenders had dragged Future Retail to the insolvency court as the debt-strapped company owned by Kishore Biyani owes over ₹16,000 crore to the lenders. On Monday, the Mumbai Bench of NCLT registered the matter.

Sources in Reliance have said that they may bid for Future Retail if the valuation is correct. However, experts fear that Future Retail may not have much value left. The Hindu BusinessLine

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2022 TV Veopar Journal