The Future Group, the parent company of Big Bazaar, is currently looking at bankruptcy as Reliance cancelled its $3.2 billion deal. For different reasons, Reliance’s acquisition of Future Group’s assets was unable to be completed.
Two years ago, in 2020, Reliance announced that it would be acquiring Future Retail’s assets, such as stores and warehouses. However, this did not sit well with Amazon. In 2019, Amazon acquired 49% of Future Coupons and was named the “sole e-commerce” provider for a few Future Group brands. According to Amazon the sale of assets by the Future Group violated the agreement that they had Future Coupons. Under the agreement, Future Group cannot sell its assets to its competitors.
When the deal was put to a vote, the secured creditors voted against it, despite the fact that it would have provided relief to the Future Group. Secured creditors voted 69 per cent against the deal, while unsecured creditors and shareholders voted 75 per cent in favour.
According to reports, Future Retail has both offshore and Indian lenders. SBI and Bank of India are the top lenders of the group. The offshore lenders were promised a full recovery, whereas the Indian lenders were asked to accept a 66 per cent haircut.
According to a few confidential sources, the unequal treatment meted out was the primary reason for the deal’s demise. Since the deal fell through, the shares of Future Group tumbled by nearly 20% while pushing Future Retail to the brink of bankruptcy.
Featured image source: News 24