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Vijay Mallya's USL exit: Kingfisher Airlines lenders to move DRT

Lenders have moved DRT to stake claim on the $75 million severance package Mallya will be getting for quitting USL

Press Trust of India  |  Mumbai 

Vijay Mallya waves in the paddock during the third practice session of the Indian F1 Grand Prix at the Buddh International Circuit in Greater Noida, on the outskirts of New Delhi
Vijay Mallya

The consortium of 17 lenders to the long grounded Kingfisher Airlines have decided to move the Debt Recovery Tribunal (DRT) against the airline Chairman to stake claim on the $75 million severance package he will be getting for quitting United Spirits (USL). Last week, Mallya quit as chairman of after Diageo, the majority owner of the country's largest liquor company, agreed to pay him $75 million (Rs 515 crore) in a sweetheart deal, that has since then came under markets regulator Sebi glare as well as minority shareholders. "Since Mallya had given personal guarantees for the loans given to Kingfisher, this money (which he will receive from Diageo) belongs to us. We have decided to move to the DRT to claim that money," said a senior official from a public sector bank. "We are making all out efforts to get our money back. We will use all the opportunities to recover our money bank," said another state-run bank official. ALSO READ: Vijay Mallya exits United Sipirits; 2 lakh investors stuck in Kingfisher Airlines Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank of India which had an exposure of over Rs 1,600 crore to the now defunct airline. Other lenders include PNB, BoB, Canara Bank, Bank of India, Central Bank, Federal Bank, Uco Bank and Dena Bank among others. As part of the deal, said it would pay $40 million immediately to Mallya with the balance being payable in equal installments over five years.

It will also absolve Mallya of all liabilities over alleged financial lapses at the company founded by his family. auditors had found that Mallya had diverted Rs 7,200 crore of the funds to airline, which again was diverted elsewhere. That apart, he is facing probe any group company United Breweries for allegedly siphoning off over Rs 1,300 crore from the company. A day after Mallya announced his exit from USL, UBHL said it would pursue the case against Mallya. is the majority shareholder of with a 54.78% holding, excluding the 2.38% owned by the Benefit Trust. World's largest liquor company by revenue took over in 2013 in an over Rs 11,000 crore deal. Mallya personally holds only 0.01% in as of December 2015, while his group firms owns 3.99%. However, more than half of these shares are pledged with banks for various loans for group companies, primarily the airline. Mallya's exit from follows two state-run bank -- State Bank of India and Punjab National Bank declaring him and his group holding company United Breweries Holdings and Kingfisher Airlines as wilful defaulters. A 17-member consortium led by SBI has also decided to auction Kingfisher House in Mumbai on March 17 this year in a bid to recover debt due from Kingfisher. So far, the lenders have recovered around Rs 1,200 crore from their original exposure of around Rs 7,800 crore by selling pledged shares and other monetisable collaterals. Banks are charging 15.5% compounded interest on this principal amount, which have not been serviced since January, 2012.

First Published: Sun, February 28 2016. 19:22 IST
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