Karnataka HC admits second winding-up plea against UB Holdings

Decision comes two days after Mallya lost his right to stop bank's seizure of Mumbai-property Kingfisher House

In a setback to UB Group Chairman Vijay Mallya, the high court here on Friday admitted a second winding-up plea in less than a month against the Group’s principal holding company, UB Holdings Ltd, which owes its creditors about Rs 600 crore. This comes barely two days after Mallya lost his right to stop bank seizure of his Kingfisher House in Mumbai.

Judge Anand Byrareddy admitted a petition from French-Italian aircraft manufacturer Avions de Transport Régional (ATR) against Mallya’s firm for non-payment of about Rs 92-crore dues. The company’s counsel, Holla & Holla, has been given time up to January second week to file an appeal against the court’s decision. Failing which, an advertisement asking the creditors to approach the court for their dues will be published in newspapers.

In a similar ruling on November 19, judge Byrareddy upheld BNP Paribas’ petition seeking a wind-up of the firm. UBHL had provided guarantees to BNP Paribas to finance three aircraft for group firm Kingfisher Airlines. Of the five other wind-up appeals filed against the company, the three other petitioners are Intl Aero Engines (IAE), Rolls-Royce & Partners and RRPF Engine Leasing. Together, the five are fighting to get back dues of about Rs 600 crore from UB Holdings. The court also heard arguments in the winding-up petition filed by engine manufacturer IAE against UB Holdings but has not admitted their appeal yet. However, Mallya’s lawyers claimed Kingfisher Airlines suffered a loss of Rs 1,600 crore due to faulty engines supplied by IAE.

UB Holdings is in the process of filing an original side appeal (OSA) against the BNP Paribas order and the matter will be heard on Thursday.  

The court has also upheld a similar petition from Aerotron Ltd against the grounded-carrier on December 6. The airline is counting dues of about Rs 7,000 crore to various lenders, including a consortium of banks.

In the past 30 days, lenders have moved swiftly to corner Mallya over dues from the two companies. They are trying to monetise the collateral and recover their loans.

On December 10, Citicorp Finance Ltd, sold about 1.34 per cent of a stake in another group firm, United Breweries Ltd, from a part of the pledge by Kolkata-based Kamsco Industries Private Ltd, a part of Mallya’s corporate empire. The shares were picked up by Heineken in the open market for Rs 275 crore, in a move that made the Dutch brewer the largest shareholder in the maker of Kingfisher beer with a total stake of 38.7 per cent. The company may be interested in buying more shares if made available to them.

SBICAP Trustee Company, acting on behalf of State Bank of India, the largest creditor to Kingfisher Airlines with dues of Rs 1,600 crore, had moved to seize Kingfisher House less than Rs 100 crore in an attempt to reclaim some of the loan it had given to the company. The Kingfisher Villa in Goa, which has also been pledged by Mallya for some loans, is also under dispute at a Goa court after he sought to restrain SBI from making any changes to the property.