Karnataka HC admits petition to close UBHL

Creditors to UBHL dragged the company to court to seek dues of about Rs 600 cr that the firm had failed to replay citing lack of funds

The Karnataka High Court on Tuesday admitted a petition by BNP Paribas for the winding-up of UB Holdings Ltd (UBHL), the UB Group’s principal investment holding company. Through five such winding-up petitions, UBHL’s creditors had dragged the company to court, seeking dues of about Rs 600 crore. On Tuesday, judge Anand Byrareddy admitted the petition, giving the company’s counsel four weeks to file an appeal and seek a stay order. After four weeks, 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 September 30, UBHL had debt of Rs 2,485 crore in long-term borrowing and Rs 504 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 Rs 1,400 crore. The court had granted UBHL approval for the share sale after it had agreed to deposit Rs 250 crore as guarantee. In August, UBHL Chairman Vijay 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 has borrowed heavily and lent about Rs 3,000 crore to grounded UB Group carrier Kingfisher Airlines. As promoter in the airline, UB Group holds 32.12 per cent stake in Kingfisher. UBHL accounts for 21.36 per cent stake. Various creditors, led by a consortium of banks, have recalled loans of about Rs 7,000 crore to Kingfisher, for which UBHL and Mallya himself stood guarantee. The creditors have been trying various means to seek 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) to Kingfisher House, the company’s corporate headquarters in Mumbai.

Byrareddy has stayed any action against Kingfisher House until December 6, 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,  because of 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 its revival based on funds from a potential investor (whose identity has not been made public).