Reliance Calls Off Deal With Future Group After Secured Creditors Voted Against It

Synopsis: The majority of shareholders and unsecured creditors of FRL did vote in favor of Future Lifestyle Fashions, Future Retail, and other store and their amalgamation with the Reliance stores. But the out of 5 secured creditors 4 of them voted against the deal.

On Saturday, Reliance Industries (RIL) announced that they will not be buying Future Retail for around 25,000 crores and they cannot implement it as the lenders of the company have rejected the deal of the retail company. Reliance Group has called off the deal of purchasing Future Retail Ltd (FRL) and has ended the long-going speculations. The actual plan of acquiring Future Group was announced in the year 2020 but it was not done at that time because the complete case turned down into a legal battle between Amazon and Kishore Biyani the founder of Future Group. The case was in the Supreme court as well as an arbitration tribunal in Singapore.

However, the acquiring plan was dumped on Friday as around 69% of secured creditors voted against the plea while on the other hand, around 86% of FRL shareholders supported it. The majority of shareholders and unsecured creditors of FRL did vote in favor of Future Lifestyle Fashions, Future Retail, and other store and their amalgamation with the Reliance stores. But the out of 5 secured creditors 4 of them voted against the deal which could have provided Future Group with the resolution of around a 25,000-crore scheme and sell most of their logistics and retail business to Reliance Group. 

Talking about the Future Lifestyle Fashions around 81.91 percent of shareholders voted in approval of the merger but all the large lenders and shareholders rejected the proposal and voted against it. The RIL also informed the stock exchange on Saturday in their regulatory filing, 

As per these results, the shareholders and unsecured creditors of FRL have voted in favor 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.

Also, as per the Future Group’s experts, this step has brought them one step closer to filing for bankruptcy. All the six entities of the Future Group on Friday confirmed to the stock exchanges in regulatory filings that they have cut off the deal with Reliance. FRL also said, 

We refer to our earlier communication of 22nd April 2022 wherein voting result of the NCLT-convened meetings of shareholders, secured creditors, and unsecured creditors was communicated.

The Future Group in order to prevent bankruptcy had called a meeting in which they have asked all their secured and unsecured shareholders and creditors to take part so as to accept the deal with Reliance Group. Also, as per the results which were submitted to Stock Exchange, Future Groups, 75 percent of unsecured creditors and shareholders have voted in the favor thus approvals from the remaining 25 percent will decide the company’s fate.