Future Retail plans to go into liquidation if the deal to sell assets to Reliance Industries, fails. This will result in loss of livelihoods for over 29,000 of employees.
The COVID-19 pandemic has hit many businesses, especially in the retail sector, and the FRL-Reliance deal was aimed at protecting the interests of all stakeholders through a large infusion of funds and the acquisition of liabilities, FRL said it would take appropriate steps to ensure its deal proceeds unhindered, while Reliance said it will complete the transaction.
Amazon recently won an injunction from a Singapore arbitrator to halt FRL's deal to sell assets to Reliance. Amazon alleged FRL had breached certain contract provisions it entered into last year in a separate deal with the US firm. The dispute centres around FRL's decision in August to sell its retail, wholesale, logistics and some other businesses to Reliance for $3.38 billion, including debt.
Amazon argues that a 2019 deal it had with a Future unit had clauses saying the Indian group couldn't sell its retail assets to anyone on a "restricted persons" list including any firms from Reliance group. The deal specified any disputes would be arbitrated under Singapore International Arbitration Centre rules.
A 130-page order by the arbitrator reveals how Jeff Bezos-led Amazon argued that Future breached agreements which barred it from selling retail assets to entities including Reliance. It also shows the level of concern at Future if the deal breaks.
