Banks settle Rs 737 crore loan on south Mumbai mall with Biyani, take a 40% cut

MUMBAI: Lenders led by Canara Bank have approved Kishore Biyani's one-time settlement offer for the debt owed by the holding company of SOBO Central Mall (formerly known as Crossroads) at Haji Ali in south Mumbai.

Mall owner Bansi Mall Management Company (BMMCL), promoted by Biyani, owed lenders Rs 737 crore against which the promoters have offered Rs 440 crore.

The settlement amounts to a 40% haircut for lenders. A joint lender meeting approved the offer last month after lenders failed to receive any bids for the mall in an auction in Jan 2024, where the reserve price was fixed at Rs 475 crore. Lenders initially valued the mall at Rs 600 crore while sanctioning the loans. However, with the premises falling into a state of disuse, the value was marked down internally to Rs 400 crore. Although the company's contractual liability is Rs 737 crore, the book liability of the banks holding the first charge (Canara Bank and Punjab National Bank) is Rs 220 crore. The additional liability of Rs 575 crore arises from a second charge held by United Bank of India and PNB against which the property was offered as security.

Both Canara Bank and Biyani did not respond to queries for comment. The banks have tentatively accepted the proposal at the joint lenders' meeting. The deal is subject to the borrower completing some formalities, including paying 10% upfront and the rest before third week of March.

BMMCPL was incorporated in 2005 by promoters of Future group to develop and manage the mall. SOBO Central Mall has a total leasable area of 148,198 sq ft, which was rented out to Biyani's group companies, including Future Consumer Enterprises, Future Retail and Future Lifestyle, with Future Consumer Enterprises occupying only 1% of the leasable area.

BMMCPL defaulted on its obligations after it stopped receiving rental income after Covid lockdown. Rent recoveries were also weak because of the distressed state of Future companies renting the premises. The company's financials were severely affected by the lack of cash flows, and it continued to default. This prompted lenders to initiate Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

Crossroads was the first mall in the country set up by Ashok Piramal group. When it was launched in 1999, the management found it so hard to manage customer traffic that it briefly restricted free entry to those who had either a credit card or a mobile phone-both a rarity in those days. Those without any of these items would have to pay a Rs 60 entry fee. But a downturn in retail led to the promoters exiting the mall management business.


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