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RIL-FRL deal off, IBC fears: Shares of Future group cos fall up to 20%

Shares of Future group companies plunged by up to 20 per cent on the stock exchanges on Monday with Reliance Industries (RIL) calling off the deal to buy Future Retail assets after secured lenders to the group firms rejected the RIL proposal.

Future Supply Chain plummeted by 19.96 per cent to Rs 37.30, Future Market Network plunged by 14.30 per cent to Rs 7.07 and Future Lifestyle Fashions by 19.89 per cent to Rs 29.40. RIL shares declined 2.31 per cent even as the Sensex fell 617 points, or one per cent, to 56,579.89.

Future Retail tanked by five per cent to Rs 27.80 and Future Enterprises fell by 9.87 per cent to Rs 5.66. Future group firms fell amid speculation that banks are likely to push for group insolvency as all Future groups are interconnected in the business. If this happens, equity shareholders of Future group companies are likely to see the value of their shareholding being wiped out if the company is taken to the bankruptcy court for resolution.

Once a company is taken to the IBC route, equity shareholders have the last claim over any assets of a company after dues to the government, financial institutions, banks and other creditors and bondholders are paid off. Banks are likely to take Future Retail to the NCLT after they rejected the company’s plan to sell its assets to Reliance Industries Ltd (RIL). Future group companies have a loan exposure of over Rs 28,000 crore.

Shares of Reliance Industries also dipped 2.3 per cent to Rs 2,694.85 on the BSE.

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