Amazon India is preparing to approach the Delhi High Court and the National Company Law Appellate Tribunal (NCLAT) to challenge the tweak in the lease structure of the Future Retail stores. They also plan to question the role of the company's independent directors involved in the changes, as per a report by the Economic Times (ET).
Due to alleged non-payment of rents to Reliance Retail, the Reliance Industries have seized control of over 300 large-format stores of the Future Groups resulting in their shutting down.
These include 200 stores where Big Bazaar, a Future Retail Limited hypermarket chain, operated as well as around 100 stores where Central and Brand Factory operated.
“Amazon is likely to file new applications in the Delhi High Court and the NCLAT against FRL for agreeing to change the lease agreement undertaken 12-15 months back, which allowed Reliance to become the lessee and sub-lease the location to FRL…,” the report said.
This modification in lease structure allows Reliance Industries to take over the locations which have defaulted on the rent.
The petition will also question the role of independent directors of FRL who gave a green-light to the changes even as the matter is sub-judice.
Reliance has shut down many stores of the Future Group in several cities. They have removed their signage and are planning to replace I with Reliance Retail outlets in the coming time (days/weeks). The online deliveries have also been hampered.
FRL has a debt of INR 17,000 crore and it has been classified as a Non-Performing Asset (NPA) as per its lenders.
“Reliance said since FRL is an NPA, any lender could invoke the IBC (Insolvency and Bankruptcy Code) and take possession of the assets… So, it is a pre-emptive move on part of Reliance, and it is to ensure that the (Future-Reliance) deal goes through and to prevent a takeover by any lender,” as per a source quoted by the ET.
This move will help over 30,000 employees of FRL to retain their jobs as Reliance Retail will offer them their current positions without any performance check or interview.
In August 2020, boards of Reliance Retail and FRL approved the Scheme of Arrangement to transfer the retail and logistics business of the Future Group to Reliance Retail Ventures Limited (RRVL) for a total of INR 24,713 crore.
FRL suffered a loss of INR 4445 crore during the calendar year 2021.