End near for Kingfisher Airlines as HC orders winding up
19 Nov 2016
The Karnataka High Court on Friday ordered the winding up of Vijay Mallya's Kingfisher Airlines Ltd (KFA), in a case filed by European aviation firm Aerotron Ltd, and an official liquidator will now take charge of the assets and books of the grounded carrier.
Justice Vineet Kothari of Bangalore High Court passed the order on a day when a lawyer representing the airline withdrew from the case, claiming that he had received no instructions from his client to appear on behalf of the airline, two people who were present at the hearing told The Economic Times.
Justice Kothari asked the official liquidator to take charge of the airline's assets.
Aerotron, an unsecured creditor of the firm, had moved the court in 2014 to recover $6.23 million that was due to it as of 4 July 2012. Aerotron was a supplier of aircraft components to KFA.
In October 2012, the Directorate General of Civil Aviation suspended the operating permit of Kingfisher Airlines. The licence has since expired.
According to advocate S S Naganand, who appeared for Aerotron, at least 46 other firms have moved the high court in Bengaluru seeking winding up of Kingfisher Airlines. The airline's pilots also moved a similar petition after not being paid their dues for over two years.
Since its inception in 2005, Kingfisher Airlines never made a profit, despite being at one time India's second-largest carrier by passengers.
The court is likely to hear the other unsecured creditors on 25 November. However, experts express doubts about the impact the winding up of Kingfisher Airlines will have on such unsecured creditors.
''In case of a winding up process, an unsecured creditor would receive repayment from the assets of the debtor after payments have been made for workmen dues and secured creditors. Typically, when an unsecured creditor goes down the winding up route, it is when it does not have any choice of recovery,'' Deep Roy, associate partner at Economic Laws Practice, told The Mint.
UB Group, KFA's parent company, did not respond to emails and calls from The Mint.
Mallya and KFA owe a consortium of 17 banks Rs9,091 crore. The banks would have the first rights over the assets of KFA as secured creditors.
The consortium of banks led by State Bank of India had in 2013 initiated proceedings against Kingfisher before a debt recovery tribunal in Bengaluru for defaulting on loans.
Subsequently, after Mallya left India on 2 March, the banks moved the Supreme Court against him.
In April, the apex court directed Mallya on two occasions to disclose all the assets held by him and his family.
In an attempt to recover the loans, the banking consortium tried to auction the Kingfisher logo and the once-famous tagline 'Fly the Good Times' but did not find suitable bidders.