NEW DELHI (Reuters) – If India’s Future Group cannot sell assets, $4 billion in bank loans and debentures will be at risk, pushing its retail unit into insolvency, the company said in a court filing on Wednesday against Amazon.com Inc, which wants to block the sale.
A court in New Delhi blocked Future Group’s sale of retail assets to Reliance Industries on Tuesday after Amazon raised objections to the deal.
The corporate battle has embroiled sprawling businesses led by two of the world’s richest men: Amazon’s Jeff Bezos and Reliance’s Mukesh Ambani.
Amazon had argued that Future breached contracts by selling retail assets to Reliance. The court sided with the U.S. firm, saying an earlier order from an arbitrator that put the Future-Reliance deal on hold was valid.
Future – which had argued the arbitrator’s order was not binding – on Wednesday filed a challenge against the court’s ruling, saying the company’s creditors would be at “significant risk” if the Reliance deal fails.
Other than an estimated 300 billion rupees ($4.1 billion) hit to bank loans and debentures, the deal’s failure would also impact livelihoods of 50,000 employees and 6,000 small- and medium-sized vendors, it said.
“It is inevitable that FRL (Future Retail) will go into liquidation … The magnitude of damage that may be caused to the public at large is unimaginable,” Future said the court filing, seen by Reuters.
The appeal is set to be heard on Thursday before a bigger two-judge bench in New Delhi.
Future, India’s second-largest retailer with more than 1,700 stores, and Amazon did not respond to a request for comment.
Shares of Future Retail dropped 5% in early trading on Wednesday. Reliance Industries fell as much as 1.2%, but recovered later.
The Delhi court on Tuesday asked Indian authorities to maintain status quo on the transaction, effectively putting the Future-Reliance deal on hold.
Indian stock exchanges and the country’s antitrust watchdog had already cleared the deal, though it was awaiting approval from a law tribunal.
Future in its appeal said Tuesday’s Delhi court order “rendered stillborn” the approvals.
“The sole and sheer intent” of Amazon was to prevent Reliance – which is also venturing into e-commerce – from acquiring Future’s assets, the Indian firm argued in the filing.
Amazon, which had its sights set on ultimately owning part of Future’s retail assets itself, has argued a 2019 deal it had with a unit of Future contained clauses prohibiting the Indian group from selling them to anyone on a “restricted persons” list, including Reliance.
(Reporting by Aditya Kalra in New Delhi and Abhirup Roy in Mumbai; Editing by Sanjeev Miglani, Stephen Coates and Gerry Doyle)