Future Enterprises offers one-time settlement via sale of assets

Future Enterprises has offered a one-time settlement (OTS) to lenders, indicating a 46% recovery for secured creditors, said people with knowledge of the matter. In all, the Kishore Biyani-promoted company is proposing a Rs 3,369 crore recovery to settle outstanding debt of Rs 6,713 crore through sale of assets, they said.

Future Group, of which FEL is a part, failed to clinch a Rs 24,713-crore deal with Reliance Industries to sell its retail assets. FEL manufactures, designs, procures and distributes fashion apparel for group companies. It also holds equity in the insurance ventures. Future Retail Ltd, which is Future Group’s flagship company, operates large format hypermarkets such as Big Bazaar, HyperCity, Easyday and Heritage.

The offer by Future Enterprises is seen as an attempt to prevent lenders from referring it to bankruptcy court. Also, Biyani may be aiming to revive the business, given that the non-compete clause with Reliance is void, said one of the persons cited above.


FEL has offered to make full payment to retail deposit holders and on bonds issued to Employees' Provident Fund (EPF) trusts as well as a 21% recovery for unsecured lenders, according to the document seen by ET. FEL’s top management met lenders on Friday to discuss the settlement plan, the people said. The company did not respond to ET's queries.

Future Enterprises proposed raising Rs 603 crore from the sale of real estate, which includes two apparel parks and plots at Tarapur and Palghar. Recovery from the sale of real estate would be made within nine months of signing the OTS pact.

It would raise Rs 400 crore by selling a 25% stake in the life insurance business and Rs 2,366 crore from offloading 51% of the non-life insurance business. Of the Rs 2,366 crore, it has already raised Rs 1,266 crore by selling 25% to Generali SPA, its joint venture partner in non-life insurance. It plans to sell the remaining 26% for Rs 1,100 crore by the end of October.

FEL has proposed that 14,500 depositors will get their `166 crore back in full as will the EPF trusts on bonds worth Rs 576 crore, “since it is difficult to convince them of any haircut,” according to the document cited above.

The National Company Law Tribunal (NCLT) has heard lenders’ pleas on admitting the company for insolvency proceedings and order on this has been reserved, said a third person. FEL hasn’t yet been referred to bankruptcy court, the person said.

Separately, Future Lifestyle and Fashion Ltd also informed lenders that it plans to propose an out-of-court settlement. Lenders have frozen FEL’s banking operations, stalling operations.

Future’s deal with Reliance collapsed in April after secured lenders voted against the scheme of arrangement. Lenders said they did not receive any clarity on how much money they would get from Reliance after it took possession of over 900 large-format Future Retail stores. Reliance took over these stores in a phased manner earlier this year due to non-payment of rentals by Future Group.