London to Delhi, lenders & lessors pile suits against UB

Group's Kingfisher Airlines has accumulated losses of Rs 16,023 cr and its net worth is in the negative

The lenders’ consortium of Kingfisher Airlines, parallely with the latter’s lessors and vendors, are pushing the UB Group to a corner to recover their dues. They have dismissed UB Group chairman Vijay Mallya’s statements on being hopeful of restarting the airline.

The airline’s accumulated losses are Rs 16,023 crore and its net worth is a negative Rs 12,919 crore; it has further posted a net loss of Rs 1,156 crore for the first quarter of 2013-14, on nil revenue. The lenders’ consortium is understood to have recovered close to Rs 1,500 crore of their total dues of Rs 8,000 crore. The lessors are also going all out to recover their share. For instance, one of them has filed a petition in the Delhi high court for execution of an ex-parte decree by a bench in the UK for close to $17 million; it is being contested by the UB Group.

From London to Goa and Delhi, Mumbai and Karnataka, the UB Group is fighting legal battles against the lessors and lenders, hopeful of salvaging some time before the lenders move further aggressively to enforce the corporate and personal guarantees of UB Holdings and Mallya. UB Holdings has initiated a comprehensive review of this exposure, to decide what to do.

It is understood that the lenders are mulling how to tap the corporate guarantees and how they can leverage Mallya's holding in his group’s cash cow, United Breweries. It has a market capitalisation of Rs 20,000 crore and Mallya holds 37.5 per cent in this, of which a little over 27 per cent is pledged.

Senior UB Group officials, however, maintain they will address the issue of Kingfisher squarely and are not in favour of leaving the issue suspended in mid-air. “Based on the detailed evaluation of the current situation, plans formulated and active discussions under way with prospective investors, we are confident of raising adequate finance, obtaining renewal of the (flying) permit, rescheduling debt and receiving continued support from the group,” went a Kingfisher statement.

MALLYA BATTLES MANY A FIRE

* Lenders to KFA are trying to enforce certain corporate guarantees given by UBHL to recover Rs 6,200 crore and have moved the Debt Recovery Tribunal (DRT) for the recovery

* KFA lenders have sent a notice under the SARFAESI Act to seize UBHL’s property in Goa which is leased to United Spirits

* Lenders have sold certain investments belonging to UBHL

* One of the creditors to Kingfisher Airlines (KFA) has filed an execution petition in the Delhi High Court for executing an ex-parte purported foreign decree passed by the Queen’s Bench in the UK, awarding $16.9 million

* UBHL is taking steps to defend the proceedings before DRT, claiming the validity of the corporate guarantee is under dispute

* The Goa Senior Division Court has granted an interim injunction against any coercive action by lenders of KFA. Mallya is also challenging the move

* UBHL has filed a suit in the Bombay High Court, seeking to declare the pledge agreement as void and seeking Rs 3,199 crore damages

* UBHL, to defend itself, has filed petitions in the Karnataka High Court, claiming Rs 1,319 crore as damages against the petitioners