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To accept only bid for Future Retail or not? Lenders differ


Mumbai: Lenders to the debt-laden Future Retail have extended by a week the deadline to vote on the sole plan for a takeover of the company as their ranks remain decidedly split on choosing the best method for recovering dues totalling about ₹20,000 crore.

Some banks are opposed to taking up the resolution plan submitted by SpaceMantra as it is too close to the liquidation value, while some others are inclined to accept the only offer on the table. Voting was supposed to end on Thursday but has now probably been extended until September 15, people familiar with the process said.

“The voting timeline has been extended until the 12th, with an enabling resolution to extend it further until the 15th. None of the banks have voted so far; everyone is deliberating their next move,” said a person familiar with the process. “Banks need time to take internal approvals, but specifically in this case, no one is in a hurry to make a decision.”

SpaceMantra, a retailer of construction, building material and office furniture, is the sole bidder to take over Future Retail, which owes ₹19,773 crore to financial creditors. Space Mantra’s offer of ₹553 crore comes to a 2.79% recovery for creditors.
Lenders are not comfortable with the poor recovery on offer, with some even questioning the plan. Last week ET reported that HDFC Bank has opposed the decision of resolution professional (RP) Vijaykumar Iyer to put the plan to vote, alleging “gross illegalities” and “procedural lapses” in the resolution process. The bank has accused the RP of failing in his duty to maximise value for financial creditors. HDFC Bank also alleged that out of the 302 stores that were part of the Future Retail assets when the insolvency process commenced, the RP did not have access to 228 stores.Lenders Divided“There are some lenders who do not want to go ahead with this resolution plan and have expressed reservations openly. A part of their problem is that if they dissent they end up getting nothing,” said a second person aware of the process. “But there are only two options before the committee of creditors (CoC): Either go with this plan or liquidate the company, which will be another process. It has been more than a year since the company is undergoing this process; so there is not much time left, too.”

RP VijayKumar Iyer did not reply to an email seeking comment.

Lenders want to avoid selling the company cheap so close to the liquidation value, to prevent any conspiracy theories later.

“The fact that this bidder is a little-known company has raised doubts on whether it is bidding on behalf of someone else. SpaceMantra claims it has a buyer for these assets and also promised the full amount to lenders within three months even if it fails to realise the expected value,” said a third person aware of the plan.

“The fact is that there is very little room to delay the process now. Unless there is a very solid reason like the emergence of a new applicant, which looks unlikely,” said a fourth person aware of the process. “There is a big possibility of this account being liquidated as banks will not want to take a chance at selling it so cheap and risk inquiries later.”


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