India s Future Group launches Supreme court challenge to avoid insolvency and also challenges its own lenders

India's Future Group today challenged its own lenders in the Supreme Court in a bid to avoid being named a defaulter for missing payments, citing its ongoing dispute with partner Amazon.com Inc.

In its plea FRL said it lost time and was unable to service the debt as its Rs 25,000 crore deal with Reliance Retail is locked in court due to opposition from Amazon. Future faces the risk of its loan being classified as non-performing assets (NPAs) by the lenders if the retailer fails to pay up Rs 3,500 crore by January 29.

"Orders of injunctions passed in arbitration and related proceedings initiated by Amazon.com NV Investments Holdings LLC, to which Petitioner No.1 was erroneously joined as non-signatory party] have impeded the Petitioner No.1’s ability to adhere to the timelines of monetisation of small format stores under the Framework Agreement," the petition said.

Earlier this month, Future Retail had said it had missed the due date for the payment of Rs 3,494.56 crore to banks and lenders as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetisation plans. It has till the end of this month to make the payment.

Moving an urgent petition on Tuesday, FRL has requested the apex court to issue a "direction restraining Respondent Nos.2-28 (lenders) from declaring the Petitioner No 1 (FRL) as a Non-Performing Asset

In August 2020, the Future group had announced a Rs 24,713-crore deal for sale of the retail and wholesale business, and the logistics and warehousing business to Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries Ltd.

However, e-commerce major Amazon is contesting the deal through its 49 per cent stake in Future Coupons Pvt Ltd (FCPL), which is a shareholder in Future Retail.

After failing to do so, Future in a new court filing at the Supreme Court on Tuesday asked judges to order its lenders and the country’s central bank to grant more time to execute the sale, and that it not be classified as a defaulter.

The company’s 1,700 outlets include roughly 900 small-sized stores, with the rest being large-format hypermarkets and fashion outlets.

Future earlier group told Indian exchanges this month it was unable to pay 35 billion rupees ($470 million) it owed to its lenders on Dec. 31 as it could not sell certain small stores due to the dispute with Amazon. It had hoped to use a 30-day grace period to resolve the situation.

Future’s filing included a letter from the State Bank of India to the company on January 15, warning the company that if it does not pay the amount due to lenders, it could face legal action.

This, SBI warned in its letter, could include “initiating insolvency proceedings” against Future, in line with Indian laws.

Future’s main retail arm, Future Retail, asked judges to quash such default notices from its lenders, its filing showed.

The matter is presently in dispute before the Supreme Court and Singapore International Arbitration Centre (SIAC).