Stage set for aggressive bidding at Future Retail

As 13 potential bidders are in the process of concluding the assessment of liabilities in Future Retail (FRL), the bankers expect better recovery rate against their claims worth ₹21,555 crore. The potential bidders are expected to submit their final resolution plan by mid January, said the executives involved in the process.

Mukesh Ambani-controlled Reliance Retail Ventures Ltd (RRVL), which failed to complete the ₹24,713 crore takeover of Future assets last year, is one of the frontrunners to buy FRL. April Moon Retail (a joint venture between Adani Group and Flemingo Group), WH Smith Travel and Dharampal Satyapal are also in the fray to take over the firm to expand their retailing footprint.

The financial creditors, which include banks and financial institutions, so far claimed ₹21,555 crore from FRL. Of which, Rs 19,433 crore has been verified by the resolution professional until November 30.

According to the expression of interest (EoI) invitation document, FRL has a network of 302 leased retail stores across 23 states and union territories. It consists of 30 large format stores such as Big Bazaar and FBB and 272 small format stores. However, the size of the network, which is largely non-functional, is not enough to recover the liabilities completely, said an execuitve involved in the process.

The original deadline for submission of final bids was December 15. But it delayed as several potential bidders couldn't complete assessment of liabilities.

The resolution professional has selected 13 entities as potential bidders on November 20. The list of potential bidders also include Capri Global Holdings, Nalwa Steel and Power, Shalimar Corp, a consortium between B-Right Real Estate and Ayekart Fintech, Bommidala Enterprises, Dickey Alternative Investment Trust, a consortium between Payard Investments and Gordon Brothers International, SNVK Hospitality and Management, and United Biotech.

Bank of India filed the Insolvency suit against FRL after the latter defaulted loan repayments. The Mumbai bench of the National Company Law Tribunal (NCLT) had on July 20 directed to initiate CIRP (Corporate Insolvency Resolution Process) against FRL. Earlier, the lenders had rejected the ₹24,713 crore takeover of the 19 Future group companies, including FRL, by Reliance Retail Ventures Ltd amid legal objections by Amazon.

FRL disclosed in February that its 835 retail stores, accounting for 55-65 per cent of its revenues, had been shut down on account of strained cash flows, and its inability to pay lease rentals. Reliance Retail took over those stores as it were sub-leased to Future Retail by Reliance. The Ambani-controlled retailer subsequently started its own stores in these locations under new branding 'Smart'. Amazon challenged the move and the matter is being heard by the Supreme Court.