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Amazon accuses independent directors of Future Group of fraudulent strategy


Amazon accuses independent directors of Future Group of adopting fraudulent strategies

New Delhi:

Amazon has accused the independent administrators of Future Retail Ltd (FRL) of facilitating the ‘fraudulent scheme’ to transfer 835 stores to billionaire Mukesh Ambani’s Reliance Group, saying the story of the transfer was due to non-payment of huge unpaid rent was a “sham”. as the retailer had said a month before such a move that the unpaid rent was only Rs 250 crore.

The US retailer wrote on May 19 to the independent trustees of FRL said the company had during its meeting with major lending banks on January 1, 2022, “categorically admitted that the unpaid rental charges were only Rs 250 crore. FRL further stated that he voluntarily withheld the quantity”.

“Amazingly, FRL had managed to do this without halting any of its operations or divesting its stores,” he wrote.

“Therefore, any narrative that there has been an alleged transfer due to the non-payment of huge unpaid rent for no less than 835 retail stores, that too as of February 26, 2022, is nothing other than a sham and a false narrative to regulators, creditors, shareholders and the courts,” he added.

Future and Amazon were locked in a bitter legal battle after the US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Center (SIAC) in October 2020, arguing that FRL breached their contract by entering into a agreement to sell its assets to billionaire Mukesh Ambani’s Reliance Retail on a sell-down basis for Rs 24,713 crore.

The Reliance deal fell through last month after FRL lenders rejected it. But before that Reliance Group, called MDA Group by Amazon, took over operations of dozens of Future stores after the retailer failed to pay rent.

“On January 22, 2022, FRL sent a letter to Bank of India, State Bank of India and Saraf and Partners, in which FRL reiterated its position on the sale of small store formats, in flagrant disregard of binding injunctions against it If the retail stores were not available with FRL, FRL would be unable to make such a claim,” Amazon said.

“The alleged handover of FRL’s business assets is therefore not due to the non-payment of unpaid rents.” “The alleged divestiture is nothing more than an intentional fraudulent action in furtherance of the scheme to ostensibly alienate retail stores, disregarding the rule of law. It was made without notice to the courts, regulators , to lending banks and solely motivated by a desire to defeat any final award in the arbitration proceeding in favor of Amazon,” he said.

An FRL spokesperson had no immediate comment on the story.

“The retail store alienation scheme grossly undervalues ​​retail stores and further amounts to acts amounting to illicit trading to defraud creditors,” he alleged warning that developers, KMPs and directors, including independent directors, are liable to imprisonment under various provisions. of law, including the Companies Act, 2013.

Amazon said FRL said on March 9 for the first time that termination notices were issued by entities affiliated with the MDA Group.

“FRL further revealed that at least 835 retail stores (contributing 55% – 65% of FRL’s total revenue) have allegedly been closed, possibly giving way to stores operated by entities owned by to the MDA Group. FRL was in collusion and in ongoing discussion with the MDA Group,” he alleged.

“The circumstances surrounding FRL’s purported sale of the retail stores to the MDA Group establish that the purported ‘deal’ was nothing more than a pretense and scheme wrongly adopted by FRL, with the connivance and collusion of the MDA Group, to allegedly transfer retail stores.”

Amazon accused FRL of devising “a scheme to allegedly alienate and transfer approximately 835 retail stores, including both large-format stores such as ‘Big Bazaar’ and small-format stores such as ‘Easy Day’ and “Heritage Fresh”” to Ambani’s Reliance (MDA Group) “subject to enforceable injunctions and court orders”.

He said the retailer’s lenders’ rejection of the sale of assets to Reliance was “a telling fact and indicates greater unease in the way FRL and other associated companies have dealt with constitutional courts, regulators , lending banks, its shareholders and other stakeholder interests”.

Stating that the independent administrators had in January this year rejected its proposal for financial assistance to FRL citing the then-proposed sale to Reliance, Amazon said: “It now appears that FRL has allegedly sought to alienate its retail stores in favor of the MDA group by everything means possible.”

“You, as independent administrators, facilitated this fraudulent scheme to defraud the Indian public and regulators,” he alleged.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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