(Bloomberg) -- The founding family of Amazon.com Inc.’s brick-and-mortar retail partner in India breached loan terms, according to people with knowledge of the matter, as market turmoil from the coronavirus pandemic adds to financial strains in the country.
At issue are the loans taken by the founding Biyani family of the Future Group, which comprises listed companies including Amazon partner Future Retail Ltd. The loans were backed by shares in the family’s listed units, but are in breach of terms including collateral cover requirements, the people said, asking not to be identified as the details are private.
The development comes after another such case emerged this week, as founder of IndusInd Bank Ltd. repays debt backed by shares after a stock rout caused a breach in debt terms. The coronavirus emergency triggered record declines in risk assets around the world in recent weeks before rallies from Tuesday, and Indian equities have been no exception. That’s put pressure on tycoons who had used share-backed debt to expand their businesses over the years.
A Future Group spokesman declined to comment.
The founding family of Future Group is in talks with their creditors to fix the problem. They are exploring the sale of stakes in the firms to pay down their debt in exchange for forbearance from creditors, who have the alternative of seizing the shares instead, the people said, asking not to be identified because the matter is private.
Meanwhile, holders of bonds issued by two group companies took control of 8% equity share in publicly traded Future Retail on March 20, according to an exchange filing by the debenture trustee for the debt. The shares pledged by the founders were invoked on instruction from bondholders due to an “occurrence of event of default,” IDBI Trusteeship Services Ltd. said in the filing on Tuesday.
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