More trouble for VJ Mallya (Update)

UPDATE

Vijay Mallya

In a further blow to Vijay Mallya's United Breweries Holdings (UBHL), the Karnataka High Court on Friday, admitted six winding-up petitions filed against the company by Kingfisher Airlines' creditors – including the consortium of banks led by State Bank of India (SBI) and separately United Bank of India (UBI) – who are seeking to enforce corporate guarantees given to them.

The development comes a year after the court had admitted the first of the winding up petitions against UBHL, the parent company of the UB Group.

The six petitioners also include IAE International Aero Engines, Rolls Royce & Partners Finance, RRPF Engine Leasing and Hindustan Petroleum. The court directed that the petitions shall be advertised in the first week of February, while posting the cases for hearing during the same month.

In his order, Justice AS Bopanna observed that the defenses made out were not substantial or bonafide and that it was a ‘tailored defense as it appears from the circumstance'.

“Even in the case of the petitioner Banks, though the suit seeking declaration against Corporate Guarantee dated 21.12.2010 is filed, it is clear that Dr Vijay Mallya having executed the personal guarantee was aware of the position and the challenge was made only at a stage when the recovery proceedings were initiated in Suit (L) No.263/2013 only on 26.03.2013 so as to put forth an ostensible defense, being aware that proceedings will be initiated," the order went.

In its defense, UBHL had pointed to existing disputes with the engine manufacturers. In the case of the banks' petitions, it had argued that the banks had approached the DRT and that parallel proceedings were not permissible. The company also said it has filed a suit in the Bombay High Court contending that the corporate and personal guarantees were void “ab initio".

Two winding-up petitions against the grounded airline, including one by SBI, had been admitted by the Karnataka High Court in December 2013. The admission of the fresh petitions will lead to more hearings on whether UBHL should be wound-up.

SBI consortium's petition, filed in August 2013, sought to recover dues of Rs 5,823 crore.

UBI, which had filed its petition earlier, though it is a part of the consortium, is looking to recover Rs 450 crore.

Oil marketing company HPCL is looking to recover Rs 66.72 crore while IAE International Engines's dues are $30.68 million (Rs 153 crore). Meanwhile, Rolls Royce and RRPF's dues are $10.43 million and $5,33,268 respectively.

Friday's development, incidentally, came a week after the Calcutta High Court's dismissal, on technical grounds, of UBI's decision to declare Mallya and the airline willful defaulters. Indian Express

12/01/14 India's government rejected F1 team owner Vijay Mallya's reappointment as chief of the grounded Kingfisher Airlines Ltd. (KAIR) in a rare veto of a company decision as the liquor tycoon battles creditors and shareholders.

The Ministry of Corporate Affairs rejected the company's application to ratify Mallya's reappointment to the position for five years starting Oct. 16, 2013, according to an exchange filing today. The carrier stopped flights in 2012 after losses widened amid mounting debt, leading to defaults on payments to lessors, lenders and airports.

The government's action is the latest blow to Mallya, 58, after a bank named the airline and some directors including him as defaulters, a tag that may prevent him and the companies on whose boards he is a member from seeking futures loans. Separately, another filing today announced that he resigned from the board of Mangalore Chemicals & Fertilizers Ltd. (MCF), a company owned by his UB Group, spurring a rally in Mangalore's stock.

"This is fantastic, and a great victory for shareholders," said J.N. Gupta, founder of the Mumbai-based proxy advisory firm Stakeholders Empowerment Services. Such intervention by the government occurs in the "rarest of rare" circumstances, he said.

Mallya is still the chairman of United Spirits Ltd. (UNSP), now controlled by Diageo Plc. He is also the chairman of United Breweries Ltd., the producer of India's best-selling beer brand, Kingfisher.

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