By Nupur Aand and Abhirup Roi

MUMBAI, (Reuters) – Indian banks are planning to start debt recovery proceedings against Future Retail next week in order to protect their interests following the unexpected takeover by rival Reliance of some stores. Two bankers spoke to Reuters.

Future was severely affected by the pandemic and has struggled with its debt payments. It is currently waging a fierce legal battle against Amazon. The battle against Future has resulted in a successful blockade of 3.4 billion worth of retail assets being sold to India’s biggest retailer Reliance. This was due to violations of contracts.

Future has denied any wrongdoing. Reliance Industries, which had taken over large numbers of Future shops last month due to non-payment, took control.

According to bankers, Bank of Baroda, a state-owned lender, will take Future to Debt Recovery Tribunal. The paperwork is likely to be filed this week.

One of the involved bankers said that “We’re taking this measure as a last resort to ensure our safety in this legal mess.” Reliance won’t be able to pull off another abrupt move by going to DRT.

According to Reuters, another banker who has knowledge of the situation said that other lenders may follow their lead.

Future Retail and BoB have not yet responded to inquiries for comment.

Future Group, as a group, has $4 billion in debt. The lenders are already classifying these loans as Non-Performing Assets (NPA), this quarter.

Both bankers indicated to Reuters that the National Company Law Tribunal, which handles corporate bankruptcy cases, is likely to be filed by lenders. Future and Amazon are at odds at many levels, even at India’s Supreme Court.

Ketan Mukhja, Link Legal partner, stated that due to the legal complexity in the case, banks should approach DRT first. This will allow them to quickly attach, seize or sell Future’s assets, as opposed going after the entire NCLT company.

He said, “It’s a very strategic and tactical call (by banks)”.

($1 = 76.1910 Indian dollars)