Mallya avoids bankruptcy in the London High Court as the judge wants to give him time to pay the banks in full
LONDON: indebted businessman Vijay Mallya He has avoided bankruptcy in the London High Court after a judge postponed the bankruptcy petition that Indian banks filed against him, calling it by any extraordinary measure. Chief Insolvency and Business Court Judge Briggs deferred the petition for at least six months, saying Mallya should have time to pay off the debts in full.
A consortium of 12 state-owned Indian banks led by an asset restructuring company that purchased debt owed to other Indian banks had filed for bankruptcy against Mallya on the court's Insolvency and Company List on December 10, 2019.
The bankruptcy petition is based on a court debt of £ 1.05 billion (Rs 9.92 billion rupees) made by the Debt Recovery Court, Karnataka, in respect of unpaid loans granted to Kingfisher Airlines , for which Mallya provided a personal guarantee. That court debt was recorded in England on November 24, 2017.
On sentencing Thursday, Briggs said the banks' request violated the Insolvency Law and the Insolvency Rules as they did not disclose their security over Dr. Mallya's assets. He said the banks were secured creditors at least in part.
Although he had the right to dismiss the petition on this basis, he deferred it for a period of time sufficient to allow Mallya's petitions before the Indian Supreme Court and his proposed settlement before the Karnataka High Court to be determined to allow time for Mallya to pay the debts he owes to the banks in full.
He said that both Mallya's requests have a reasonable prospect of success and that if the proposal is sanctioned before Karnataka HC, the debt of (Holdings) Ltd (UBHL) will be paid in full and there will be no liability under the personal guarantee.
It is difficult to see what reasonable basis banks can have to reject the offers, he said.
The bankruptcy petition is for any extraordinary measure, Briggs said. Banks are pushing for a bankruptcy order at a time when there are existing procedures in India, such as a challenge to personal guarantee, a challenge to the high interest rate that accumulates on debts and the Karnataka HC takes over of the compromise proposals submitted by UBHL. In addition, a petition has now been filed with the Supreme Court to sanction a binding commitment, he said.
Dr. Mallya has asked the Supreme Court to seek a court-sanctioned settlement with UBHL's creditors. It has also made an offer in Karnataka HC to sell the assets of UBHL and other companies owned and controlled by family members and deposit them in Karnataka HC.
Briggs added that the banks should have known that they were secured creditors due to their participation in the Indian proceedings. He said in India that the DRT ruling had found that bank security had priority over all other debts and government fees.
He did not dismiss, but instead deferred the request, as he said that the insured assets are unlikely to represent all of Dr. Mallya's assets and that the value of these assets is less than the judicial debt.
Mallya claimed in his witness statement that the CBI pressured the banks to file a complaint about him, Kingfisher and UBHL. He said the Indian government was under pressure to take action regarding loans owed to state-owned banks and that while the role of the CBI is to investigate regardless of political influence, I consider that there is a lack of CBI independence from ministries and departments. governmental. He claimed that on May 6, 2016, the Indian finance ministry had sent a letter to the petitioners to meet with the head of the CBI and ED in Mumbai.
Briggs said: That Dr. Mallya perceives political interference is clear, but that is not a matter for this court.
The banks had claimed that some of Mallya's assets had been committed to third parties and they were uncertain that their debts would be settled within a reasonable time.