Amazon, which has an indirect stake in FRL, has said that any person assisting the promoters in alienating assets will be liable for civil and criminal consequences under the law. The e-commerce giant also told the Supreme Court that efforts at resolution with Future group had fallen through.
On Monday, Bank of India, on behalf of lenders, issued a public notice that all moveable fixed assets and current assets, including receivables, spares, inventories and cash flows are subject to a fixed charge for the benefit of lenders. The notice said that anyone dealing with the assets could be subject to clawbacks available under the law including for “preferential “transactions”, “undervalued transactions” and fraud. A preferential transaction is one where a company pays a creditor in preference of other creditors.
According to banking sources, while domestic lenders have been offered the inventory as security, Future group has pledged furniture and fixtures to foreign bondholders. Lenders can take possession of assets under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act. They also have recourse to personal guarantees provided by the promoters. Bankers had not immediately pursued insolvency proceedings against Future as they were awaiting a restructuring plan from the borrower.
Future Retail had informed stock exchanges that it has received termination notices on 7th and 8th March for the 835 store locations on March 9. These included 342 large format stores such as Big Bazaar and [email protected] Bazaar and 493 small format stores such as easyday and Heritage stores.
“These stores have been historically contributing approx.55% to 65% of retail revenue operations of the Company. As of now, these stores are not operational for stock and inventory reconciliation. The Company is in continuous discussion with Reliance Group to maintain stock and inventory reconciliation”.
Amazon has accused FRL and its promoters of `attempting to remove the substratum of the dispute by purportedly transferring and alienating FRL’s retail assets comprising the retail stores in favour of the MDA group’.
Amazon has accused the group and its promoters of making false submissions before the Supreme Court that the retail assets would continue to vest in FRL until its proposed scheme of arrangement with MDA would be approved by the National Company Law Tribunal.