JOIN USBanks act against Future Retail for missing payments
Lenders to Future Retail have started classifying loans to the retailer as a "non-performing asset" after the company missed payments to the banks, they told the country's Supreme Court in a filing seen by Reuters.
The lenders also said they would be required by law to provision Rs 8,000-9,000 crore ($1.07 billion-$1.2 billion) in their books on account of the default by the country's second-largest retailer.
"Lenders have already classified/begun classifying the loan account of FRL as a non-performing asset ("NPA") since the payment was not made within" the stipulated time, they said in the filing, reviewed by Reuters.
Future declined to comment.
Being classified as an NPA will raise financial troubles for Future, which has for months tried to sell its retail assets to rival Reliance Industries, but failed to do so because of legal challenges from its partner Amazon.com Inc.
Citing its dispute with Amazon, Future last month challenged its lenders in the top court to avoid facing insolvency proceedings or being classified as a defaulter, after it missed making certain payments on its loans.
Future has failed to complete its $3.4 billion retail asset sale as Amazon has successfully argued before legal forums that the Indian retail giant violated certain non-compete contractual terms the two sides had. Future denies any wrongdoing.
Future has told Indian stock exchanges it was unable to pay Rs 3,500 crore ($470 million) it owed to its lenders on December 31 as it could not sell certain small stores amid the row with Amazon. It had hoped to use a 30-day grace period to resolve the situation, but was not able to do so.
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