RIL: After most FRL lenders vote against RIL deal: Reliance Industries, Future Group companies say deal’s off

Reliance Industries Ltd (RIL) called off its deal to purchase Future Group‘s assets following rejection of the proposal by a majority of lenders to flagship Future Retail Ltd (FRL).

That seemingly brings the curtain down on an acquisition plan that was announced in 2020 and then became the cause of a legal battle between Amazon and Kishore Biyani-founded Future that was fought all the way to the Supreme Court as well as an arbitration tribunal in Singapore.

FRL had said on Friday that 69% of lenders voted against the plan while 86% of shareholders supported it.

“As per these results, the shareholders and unsecured creditors of FRL have voted in favour of the scheme. But the secured creditors of FRL have voted against the scheme. In view thereof, the subject scheme of arrangement cannot be implemented,” RIL informed the stock exchanges in a regulatory filing on Saturday.

This means Future Group companies have moved another step closer to filing for bankruptcy, experts said.

On Saturday, all six listed entities of Future Group also told the stock exchanges in regulatory filings that the deal with Reliance is off.

“We refer to our earlier communication of 22nd April, 2022 wherein voting result of the NCLT-convened meetings of shareholders, secured creditors and unsecured creditors was communicated,” FRL said in a filing to the stock exchanges on Saturday.

Legal Challenges

“In view of the result as already communicated, we would like to inform that the subject scheme cannot be implemented,” FRL said in the filing. Similar filings were made by Future Lifestyle Fashion, Future Enterprises, Future Consumer, Future Market Networks and Future Supply Chain Solutions.

In August 2020, RIL subsidiary Reliance Retail Ventures Ltd agreed to purchase Future Group’s assets and businesses on a slump sale basis for ₹25,000 crore. However, the deal got stuck due to legal challenges by Amazon, which filed cases in the Supreme Court, the Delhi High Court and the Singapore International Arbitration Centre (SIAC).

In 2019, Amazon had acquired a 49% stake in Future Coupons Pvt Ltd (FCPL), which has a 10% stake in FRL. As per the FCPL investment agreements, Amazon said FRL was barred from selling its assets to certain entities, including Reliance. Amazon secured a stay on the Future-Reliance deal from SIAC in October 2020, sparking dozens of court cases between Amazon and Future Group.

The secured and unsecured creditors and shareholders of six Future Group companies voted on Wednesday and Thursday under a National Company Law Tribunal (NCLT) mandated process.