Banks may seek a wilful defaulter tag for Biyani after the forensic audit

Kishore Biyani, CEO of Future Group
Kishore Biyani, CEO of Future Group


Banks may seek wilful defaulter tag for Biyani after forensic audit

MUMBAI : Lenders to cash-strapped Future Group are exploring the possibility of invoking personal guarantees of the promoter Biyani family to recover unpaid loans given to group companies, two people directly aware of the development said.

Promoter Kishore Biyani and some of his family members have pledged personal assets, including real estate holdings, to secure loans of 10,216.77 crore for group companies and 1,441 crore for Future Retail Ltd, the persons cited above said, requesting anonymity.

Mounting problems 
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Mounting problems 

Businessmen often offer personal guarantees to lenders to secure a loan, promising to make good a payment if the company defaults. With Future Group companies owing lenders close to 25,000 crore and defaulting on a series of repayments, banks are exploring options, including the sale of personal assets, to recover a part of the funds they lent to the group.

The guarantees were provided in favour of Axis Trustee Services Ltd and Bank of India. “For a credit facility of another around 1,441 crore from Bank of India, Kishore Biyani, along with nine of his family members and an associate promoter entity, gave guarantees in their personal capacities and pledged a stake of 0.0164% of Future Retail promoter holdings," one of the two people said.

“The lenders are also likely to conduct a forensic audit of the Future Group. Depending on the outcome, they will decide whether to initiate a wilful defaulter tag against Biyani," the person added.

Biyani family members and entities that have pledged personal assets include Laxminarayan Biyani, Ashni Biyani, Vivek Biyani, Sunil Biyani, Rakesh Biyani, Anil Biyani, Gopikishan Biyani, Vijay Biyani and Akar Estate and Finance Pvt. Ltd.

Emails sent to a spokesperson for Future Retail and Kishore Biyani did not elicit any response. Emails sent to Future Retail’s lenders, the Reserve Bank of India, the Securities and Exchange Board of India and Axis Securities, too, remained unanswered.

According to the guarantee deed reviewed by Mint, Kishore Biyani, as the sole guarantor, has provided an unconditional, irrevocable guarantee for making the due repayments. Biyani has declared in the agreement that all his properties are to be kept free from mortgages, pledges, encumbrances, charges or claims and demands by any external party as long as the guarantee deed remains in force and the dues are not completely paid off.

The agreement gives Future Retail’s lenders the right of set-off and lien, irrespective of any other lien or charge on the deposits lying in any accounts of Biyani as the guarantor, according to the agreement. In case of defaults by Future Retail and Biyani, the lenders will have the right on any monies, securities, bonds and other properties held personally by Biyani to the extent of the guaranteed liabilities, the agreement said.

In August 2020, Reliance Industries agreed to buy Future Group’s retail, wholesale, logistics and warehousing assets on a slump sale basis for 24,713 crore. The deal, however, faced several hurdles, including Amazon’s objection to the sale of assets. In April, Reliance called off the transaction after a majority of secured creditors of Future Group voted against the deal. Future Retail’s lenders include Union Bank of India, Bank of India, Bank of Baroda and State Bank of India.

After RIL’s takeover of about 900 Big Bazaar stores this year, Future Retail’s revenues have slumped and shares have plunged, impacting Biyani’s personal net worth as well.

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