Bankers concern Alok Industries redux in Future Group decision

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Bankers to Future Group are anxious that the decision of the group’s retail entities may finish with steep haircuts for them at the same time as they’ve referred the group’s flagship for insolvency proceedings.

There’s a view amongst senior bankers that as a substitute of yielding a clear-cut takeover of the group’s property by Reliance Retail for Rs 24,713 crore, as was envisaged during the last two years, the decision may go the best way of Alok Industries.

Showing within the first checklist of dangerous loans drawn up by the Reserve Financial institution of India (RBI) for decision underneath the Insolvency and Chapter Code (IBC), Alok Industries was ultimately taken over by a consortium of JM Financial Asset Reconstruction Firm (ARC) and Reliance Industries in 2018 for Rs 5,050 crore. Lenders took an 83% haircut on their dues value Rs 29,500 crore.

“All court-monitored processes – be it DRT (debt restoration tribunals) or IBC – are long-drawn processes. You don’t know what you’ll find yourself with in any case that point. So, bankers are actually nervous and praying that the Future property don’t find yourself the best way Alok Industries did,” a senior banker mentioned.

Lenders are additionally in a spot after Reliance Retail shocked them in February this yr, taking up 947 Future Group shops. They’re cautious of a renegotiation of the takeover phrases, underneath the circumstances.

There had initially been hypothesis that banks might transfer the DRT to recuperate their dues from Future Group as that they had issued notices warning of clawbacks to safe their property. Bankers later characterised that motion as extra of a knee-jerk response.

”The NCLT, regardless of its flaws, is seen as a extra closely-monitored possibility and that’s the principle motive we’ve got opted for it,” one other banker mentioned.
Future Retail’s loans had been restructured underneath the decision framework for Covid-related stress proposed by the Kamath committee in 2020. All through the 19-month interval when the corporate’s loans remained underneath moratorium, bankers had been hopeful that Reliance Retail would take over Future Group’s wholesale, retail and logistics companies for Rs 24,713 crore underneath a deal thrashed out in August 2020 and clear its dues to banks. Bother emerged when Amazon objected to the deal and triggered a authorized battle that’s nonetheless ongoing.

Future Retail first defaulted on dues value Rs 3,494.56 crore in December 2021 after which didn’t treatment the default in the course of the subsequent one month, as required underneath the phrases of restructuring. It once more defaulted on repayments value `5,322 crore scheduled for March 31, 2022. The corporate has already slipped in January and the 40% provisions taken in opposition to that account will present in banks’ Q4FY22 monetary outcomes.

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