Karnataka HC adjourns UBHL winding up petitions to April 11

Mallya-owned UBHL owes Rs 8,158.89 cr in corporate guarantees for loans to Kingfisher Airlines

The Karnataka High Court on Thursday adjourned to April 11 hearing arguments by banks on a winding up petition against Vijay Mallya-led United Breweries (Holdings) Ltd for failing to honour corporate guarantees, provided to the defunct Kingfisher Airlines.

Eight banks including BNP Paribas and State Bank of India have filed winding up petitions against UBHL, majority owned by Mallya, for defaulting guarantees given to the beleaguered airline. UBHL had given corporate guarantees to the tune of Rs 7,256.24 crore for loans to run the airline, which has virtually caused the collapse of Mallya's liquor empire.

UBHL has already declared Rs 8,158.89 crore as contingent liabilities for providing guarantees to the airlines, which stopped operations in 2012. UBHL is contesting these cases in the Karnataka High Court, according to regulatory filings by the company in February. The high court did not hear the case on Thursday and set the next date for hearing for April 11.

The UB Group chairman owns 52.3 per cent stake in UBHL, both personally and through firms such as Watson and McDowell Holdings. UBHL reported a loss of Rs 1.99 crore on Rs 268.19 crore for the nine months to December. Bulk of UBHL's revenue comes from selling Kingfisher beer in Southeast Asian and West Asian markets, where he has the rights to sell the product.

Mallya, who says there is a witch hunt against him, is using the courts to delay proceedings by the banks, who lent money to run Kingfisher Airlines. The Supreme Court has issued a notice to Mallya to respond by March 30 on cases filed by State Bank of India, while the Debt Recovery Tribunal has directed Diageo to freeze the $75 million due to Mallya for non compete agreement. Diageo has already paid $40 million to Mallya and would release the balance money subject to conditions by the liquor baron.

Mallya and Kingfisher, now defunct since it suspended operations in October 2012, owes SBI and the consortium of 17 banks over Rs 7,800 crore of loans raised to run the airline. Kingfisher Airlines was started as a trophy airline by Mallya for his son's 18th birthday. The airline redefined luxury air travel in India but soon crash landed due to high cost structures, increased competition and mismanagement.

Mallya has sought time till April to appear before the Enforcement Directorate, investigating a case of money laundering for a Rs 900-crore loan granted by IDBI Bank despite an internal report objecting to the loan.