A consortium of Indian banks led by the State Bank of India (SBI) on Tuesday moved a step closer in their attempt to recover debt from loans paid out to Vijay Mallya’s now-defunct Kingfisher Airlines after the High Court in London upheld an application to amend their bankruptcy petition, in favour of waiving their security over the embattled businessman’s assets in India.
Chief Insolvencies and Companies Court (ICC) Judge Michael Briggs handed down his judgment in favour of the banks to declare there is no public policy that prevents a waiver of security rights, as argued by Mallya’s lawyers.
Meanwhile, the SBI-led consortium of 13 Indian banks, which also includes Bank of Baroda, Corporation Bank, Federal Bank Ltd, IDBI Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co Pvt Ltd as well as an additional creditor, have been pursuing a bankruptcy order in the UK in relation to a judgment debt which stands at over GBP 1 billion.
BACKGROUND
Presenting a brief background to the petition, which dates back to 2018, the latest judgment describes Mallya as an ‘entrepreneur businessman’ who had considerable financial success in India and other parts of the world as Chief Executive Officer and shareholder of Kingfisher Airways (KFA) and controlling director and main shareholder in United Breweries Holdings Ltd (UBHL). “The cost of aviation fuel rose in 2008, and the value of the rupee declined against the dollar. Dr Mallya decided to borrow substantial sums from some of the Petitioners,” the judgment reads. “Dr Mallya provided personal guarantees for the sums borrowed from the Petitioners in 2010. UBHL also provided a guarantee,” it adds. The debt in question comprises principal and interest, plus compound interest at a rate of 11.5 per cent per annum from 25 June 2013. Mallya has made applications in India to contest the compound interest charge.
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