Banks colluding with FRL, Amazon tells Reserve Bank

Priyanka Gawande

MUMBAI: Amazon Inc. has written to the Reserve Bank of India (RBI) and lenders of Future Group, alleging repeated collusion by Future Retail Ltd (FRL) and banks to deny its rights.

FRL should not be allowed to go into bankruptcy proceedings as that would impact its rights further, the online retail giant said in a letter seen by Mint.

In the l e t t e r , Amazon repeated its demand for a forensic investigation into FRL’S alleged misconduct.

“It is the duty of banks in India, more specifically, public sector banks, to ensure compliance of fiduciary duty towards the public. However, lender banks of FRL have acted in a completely irresponsible and collusive manner, despite having knowledge of FRL’S illegal actions. Thus, the present letter is being issued requesting that a forensic investigation to be carried out with respect to these collusive actions of FRL and all its lender banks,” Amazon said.

Amazon alleged that FRL was attempting to initiate a corporate insolvency resolution process through Bank of India to utilize the provisions of Section 14 of the Insolvency and Bankruptcy

Code to seek an illegal injunction in the arbitration and litigation involving Future Retail.

Thus, the insolvency petition was purposefully filed by FRL jointly with the lenders and such actions are not to be allowed, Amazon contended. Statutory authorities must hold lender institutions accountable for their ‘malicious conduct’ and take appropriate measures, it said.

The letter said that despite its pre-existing rights, if the lender banks’ illegal and malicious insolvency procedures against

FRL are allowed, there will be no accountability for FRL’S retail assets. This was in reference to Reliance Group’s takeover of Future Retail’s assets. Reliance Projects & Property Management took possession of approximately 800 Future Group stores in February, saying Future had failed to make rental payments of ₹4,800 crore for over a year.

Amazon also alleged that the collaboration between FRL and its lenders to sell the former’s small store formats through a framework agreement was part of a larger scheme to transfer or dispose of FRL’S retail assets to the Reliance Group. Under the agreement, FRL had proposed to sell the small format stores to raise approximately ₹3,000 crore to pay off debt. The agreement was not a result of financial distress and banks participated in these actions despite having knowledge of such actions by FRL, Amazon alleged.

Amazon’s plea in Delhi HC seeks enforcement of SIAC order that stayed the sale of Future’s retail assets to Reliance Retail.

AMAZON PUSHED FOR A FORENSIC PROBE INTO FRL’S ALLEGED MISCONDUCT