Secured lenders of India's Future Retail on Friday rejected a $3.4 billion sale of its retail assets, in a blow to the company which now faces the prospect of a bankruptcy process.
Nearly 70% of Future Retail's secured lenders rejected the deal to sell the group's assets to market leader Reliance Industries, it said in a stock exchange filing.
"The deal has fallen through. There is no coming back from here for Future," said a person with direct knowledge of the voting process.
The deal did not receive the requisite 75% favourable votes from secured creditors, the source added.
Reliance did not respond to requests for comment.
The rejection by lenders comes amid a legal challenge by US e-commerce giant Amazon.com Inc which has accused Future of violating certain contracts by dealing with Reliance, run by India's richest man, Mukesh Ambani.
Reliance in 2020 had sought to purchase Future's retail, wholesale and other assets in a $3.4 billion deal after Future was hard hit by the pandemic.
But Amazon soon obtained legal injunctions that stalled Future's deal with Reliance, sparking a series of legal battles at various forums, including an arbitration panel in Singapore.
In February, Reliance which had kept to the sidelines earlier in the dispute, suddenly took control of hundreds of Future stores, citing non-payment of rent, after assuming many of the leases held by cash-strapped Future.
That spooked bankers, some of whom have already initiated debt recovery proceedings against Future.
Future Group as a whole has more than $4 billion in debt and lenders have started classifying the loans as non-performing assets (NPA).
Lenders are getting ready for a lengthy battle in bankruptcy court which can take years to resolve, sources told Reuters earlier on Friday.