“The subject scheme of arrangement cannot be implemented”, RIL informed the stock exchanges on Saturday
FRL’s lenders are likely to go for group insolvency as debt mounts
On the other hand, Amazon might continue the legal battle in regard to the FRL-RIL deal
The two-year old corporate battle seemingly comes to an end as Reliance Industries Limited (RIL) calls off the INR 24,713 Cr deal with Future Retail Limited (FRL). The announcement came from the Mukesh Ambani-led group on Saturday after a majority of secured creditors of FRL voted against the deal.
On Friday, April 22, a majority of secured creditors of FRL voted against the Reliance deal. “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.
In addition, all the listed entities of FRL also informed the stock exchanges in regulatory filings that also said composite Scheme of Arrangement with RIL entities as a result of the voting outcome.
Earlier this year, the Mumbai bench of the National Company Law Tribunal (NCLT) allowed FRL to convene meetings of its shareholders and creditors to approve the sale of its retail assets to Reliance Retail.
Recommended For You:
In August 2020, RIL announced its plans to acquire the businesses of Kishore Biyani’s FRL for INR 24,713 Cr. Soon after the deal was announced, ecommerce major Amazon claimed that due to its indirect stake in Future Retail, Future Group is prohibited from carrying out the transaction with RIL. Since then, both the parties have been involved in a long legal dispute, taking the matter to several adjudicating bodies.
The issue escalated further this February after Reliance Retail started taking over the rental leases of stores run by Future Group. FRL recently alleged that Amazon has successfully destroyed an INR 26,000 Cr company. The company also informed the Supreme Court on April 1 that it is barely ‘hanging by a thread’.
Now, as RIL has finally backed out of the deal, the eyes will be on both FRL’s and Amazon’s next moves. According to an ET report, FRL’s lenders are likely to go for group insolvency as debt mounts.
On the other hand, Amazon might continue the legal battle in regard to the FRL-RIL deal, Business Standard reported. “Amazon’s legal team is discussing its action against Reliance’s move related to the rejection of the scheme. If lenders and Future Retail take the insolvency route, there is nothing much Amazon can do,” the report said quoting a source.