With the likelihood of the Future Retail Ltd being referred to an insolvency court, company’s shareholders are staring at a possible wipeout of their entire investments. They are seeking SEBI’s intervention to protect their interest and urging that FRL should not be allowed to take the bankruptcy route as it will impact their rights further.
During a Twitter Spaced Session with The Plunge Daily, Shriram Subramanian, founder and MD of proxy advisory firm InGovern Research Services, questioned the role of FRL board as well as lenders in the entire FRL-Reliance-Amazon saga and underlined the need to fix accountability of promoters and independent directors.
“The onus largely lies on the promoters and the management of Future Group and how they have mismanaged the entire matter in the first place. They frittered away opportunities leading to loss of value not only for themselves, but also for minority shareholders. It’s already a debt-fueled company and it continued taking debts without sufficient operative cash flow,” Mr Subramanian said.
He stressed that the lenders must secure the assets of the company before taking the liquidation route.
“If lenders push this company into liquidation without securing the assets of the company or without figuring out what is the state of the assets of the company, they will be doing great disservice to the stakeholders. It will be a mockery of the entire system,” he said.
Mr Vijay Kulkarni, who was also part of the session, also questioned the role of bankers following ‘forceful’ take over of FRL assets by Reliance Group
“Did bankers instruct their counsel to secure these assets? They could have asked for a one liner order from the Supreme Court or they could have pressed their legal rights. They could have invoked the Securitisation Act, Section 13.
“We also have to understand a company which was attracting investment from the likes of Reliance and Amazon is on the verge of liquidation. What stopped you from getting no objection certificate from Amazon. You went ahead with the Reliance deal even as it was evident that Amazon would object to it. When the Supreme Court suggested both the parties should explore an amicable solution, during that phase, the FRL stores were taken over,” he added.
Mr Kulkarni also pointed out that the independent directors who were vehemently opposed to the Amazon deal are nowhere to be seen now.
“Three independent directors who claimed that they had a fiduciary duty and wanted to save the minority shareholders. Where are they now? Amazon had asked for a due diligence report and their books of accounts. They refused the offer. What’s the precise role of independent directors? It is not a mere formality. They were supposed to be unbiased.”