India: Banks to sell Vijay Mallya's United Breweries shares worth Rs 5500 crore
In another setback to fugitive businessman Vijay Malla, the Prevention of Money Laundering Act (PMLA) court in Mumbai restored properties seized by the Enforcement Directorate (ED) from Mallya to banks that had granted loans to the liquor baron. Note that the ED had seized assets worth Rs 9,000 crore from the former UB group chairman in connection with money laundering, ET Now reported on May 30.
Indian lenders, led by the State Bank of India, have initiated talks with SBI Caps to sell Mallya-owned shares in United Breweries (UBL). Mallya's 16.15 per cent stake in the UB group is valued at Rs 5,500 crore and will be sold via block deals, reported Business Standard.
ED had earlier attached properties in the case and a consortium of banks had been claiming the same for debt recovery. Banks had filed for recovery in DRT (Debt Recovery Tribunal), Bangalore for which an order was issued in favour of the banks, but the ED had initially opposed the order. However, the financial probe agency later said it had no objection, following which the PMLA court issued an order on May 24.
For the uninitiated, Mallya has been facing the ED probe after Kingfisher Airlines defaulted on bank loans. While the ED and the CBI were investigating the matter, Mallya fled the country and went to London. The financial daily report cited a source saying that banks would be able to sell shares to recover their dues in the ongoing quarter.
The PMLA court said in case Mallya was found non-guilty later, the banks would have to restore the properties back to Mallya after recovering their dues. A senior public sector bank executive told the publication that the recent London court verdict would also help in recoveries. Although provisions against exposure have been made in line with regulatory norms in the past, the public money is at stake.
"Banks will like to recover dues from Mallya as soon as possible," he was quoted saying. Mallya's stake in various companies (which was kept as collateral with the banks) would be sold through block deals to get better value. "SBI Capital markets would be acting as a bridge between us (lenders) and prospective buyers of these holdings," the official added.
The consortium of Indian lenders led by SBI recently moved a step closer in their attempt to recover dues after the High Court in London upheld an application to amend their bankruptcy petition, in favour of waiving their security over his assets in India. Chief Insolvencies and Companies Court (ICC) Judge Michael Briggs handed down his judgment in favour of the banks to declare there is no public policy that prevents a waiver of security rights, as argued by Mallya's lawyers.
At a virtual hearing, July 26 was set as the date for final arguments for and against granting a bankruptcy order against the 65-year-old Mallya after the banks accused him of trying to "kick matters into the long grass" and called on the bankruptcy petition to be brought to its inevitable end".
"I order that permission be given to amend the petition to read as follows: The Petitioners (banks) having the right to enforce any security held are willing, in the event of a bankruptcy order being made, to give up any such security for the benefit of all the bankrupt's creditors," Justice Briggs' the judgment read.
For the uninitiated, in 2013, a consortium of banks, including the SBI, had asked for a payment of over Rs 6,000 crore in loans for Kingfisher Airlines. The interest on loans accumulated with total dues crossing over Rs 9,000 crore (2016). In 2014, public sector lender United Bank of India called Mallya a wilful defaulter. Other lenders like SBI followed suit.
The SBI-led consortium of 13 Indian banks, which also includes Bank of Baroda, Corporation bank, Federal Bank Ltd, IDBI Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co Pvt Ltd as well as an additional creditor, have been pursuing a bankruptcy order in the UK in relation to a judgment debt which stands at over GBP 1 billion.