SpaceMantra, the only bidder for Future Retail (FRL), and certain lenders are seeking a relook at the bidding process and extension of the deadline, which ended on September 30. This is to avoid liquidation of FRL, which would value the company’s assets much below its fair price.
The move follows the rejection of SpaceMantra’s bids by the committee of creditors (CoC) after it didn’t get the requisite number of votes through the e-voting process, which ended on September 30.
Under the Corporate Insolvency Resolution Process (CIRP), the next stage after the rejection would be liquidation as there are no other bidders, and this would mean selling the firm at “scrap” value, multiple sources close to the development said.
“Under these circumstances, the bidder and certain lenders have approached the CoC and resolution professional to explore other options, and the most important one being revisiting the entire process. Further, extension of the deadline by at least another month is also needed,” one of the sources said.
However, he did not divulge the names of the lenders who were supporting the motion. The timeline for the bidding process has been extended three times so far.
SpaceMantra, a provider of an online marketplace for the construction and interior industry, had offered about 550 crore, which many lenders believed was a “fair price”. This is close to the fair value of450 crore arrived at by independent valuers, sources said, adding the company was looking at acquiring FRL to expand its retail and B2C presence.
“In case of the company being pushed to liquidation, the lenders will not even get `300 crore for the entire assets. The creditors would have to take a very high haircut. At present, it’s a stalemate,” a source said.
Bank of New York Mellon has the highest voting share of 21.18% in FRL’s CoC, followed by Union Bank of India at 9.17% and Bank of Baroda at 8.95%.
Earlier on September 25, Kishore Biyani, the erstwhile promoter of FRL, had moved the Bombay High Court against a forensic audit process of the company. Earlier in August this year, Kishore Biyani and his brother Rakesh Biyani were asked by Bank of India to respond to findings made in the forensic audit report by forensic auditor BDO.
The forensic auditor had submitted its report on August 9, 2023, and BoI had sought representation and submissions from the company over the credit facilities availed by Biyani.