Local vs foreign: How a creditor revolt scuttled RIL's Future Retail deal

FRL's offshore bondholders -- a relatively smaller part of the creditor pool -- were promised 100% payment, while local lenders were asked to take a haircut

The preferential treatment of bondholders riled Indian banks enough to reject a $3.2 billion rescue deal from one of Asia’s richest men for a debt-laden unprofitable retail chain, according to people familiar with the matter.

Future Retail Ltd.’s offshore bondholders -- a relatively smaller part of the creditor pool -- were promised 100% payment, while local lenders were asked to take a haircut, the people said, asking not to be identified discussing confidential information. Secured Indian lenders were promised recoveries ranging between 34% to 88% of the total $4 billion in dues and even those payouts were staggered over seven years,