HC admits BNP Paribas' plea for winding-up of Mallya’s UBHL
20 Nov 2013
Liquor baron Vijay Mallya's reasons to rue the launch of his failed Kingfisher Airlines are multiplying. On Tuesday, the Karnataka High Court admitted a petition by French lender BNP Paribas seeking the winding-up of UB Holdings Ltd (UBHL), the holding company of Mallya's UB (United Breweries) Group, saying there was a prima facie case for it.
This is the fifth petition by UBHL's creditors seeking the winding up of the company to recover some Rs600 crore in dues. BNP Paribas is trying to recover around Rs203 crore borrowed by Kingfisher Airlines Ltd, promoted by UBHL, to purchase three aircraft.
Admitting the petition, Justice Anand Byrareddy gave the company four weeks to file an appeal and seek a stay. After this period, an advertisement will be published in a Kannada daily and an English daily asking the creditors to approach the court for their dues.
As on 30 September, UBHL had debt of Rs2,485 crore in long-term borrowing and Rs504 crore in short-term loans. Earlier, some of the dues were repaid from the proceeds of the sale of a 25.02-per cent stake in group company United Spirits Ltd to Diageo Plc for about Rs1,400 crore. The court had granted UBHL approval for the share sale after it agreed to deposit Rs250 crore as guarantee.
In August, UBHL chairman Mallya had said the company was close to an out-of-court settlement with two of the five creditors that had filed winding-up petitions.
UBHL borrowed heavily to lend about Rs3,000 crore to the now grounded Kingfisher Airlines. The UB Group holds 32.12-per cent stake in Kingfisher, while UB Holdings has a 21.36-per cent stake.
Various creditors, led by a consortium of about a dozen banks, have recalled loans of about Rs7,000 crore to Kingfisher, for which UBHL and Mallya himself stood guarantor. The creditors have been seeking to monetise the personal and corporate guarantee to recover their dues. On Monday, the high court had stayed a claim by State Bank of India (SBI) on Kingfisher House, the company's corporate headquarters in Mumbai.
Byrareddy has stayed any action against Kingfisher House until 6 December, when the petitions for the winding-up of Kingfisher are taken up. The Kingfisher Villa in Goa has already been seized by SBI, though the lender cannot carry out any activity or alter any arrangement on the premises under an order secured by Mallya's legal team.
Kingfisher has been given time till December 6 to produce before the court details of the progress on the airline's revival based on funds from a potential investor (whose identity has not been made public).
In Tuesday's order, Justice Byrareddy said the UBHL defence, which had sought dismissal of the BNP plea at the preliminary stage itself, is ''prima facie invalid''. The Court said BNP Paribas is entitled to claim a corporate guarantee provided by UBHL.
Justice Byrareddy pointed out that UBHL did not contest BNP Paribas' claims despite receiving a notice under the provisions of the Companies Act from the bank.
The Court said that UBHL's objections should have been raised when the company was confronted with a notice of claim.
