1. Vijay Mallya’s Kingfisher Airlines loan: Offer made to pay Rs 4,000 crore to settle case

Vijay Mallya’s Kingfisher Airlines loan: Offer made to pay Rs 4,000 crore to settle case

On Wednesday afternoon it was revealed, in a proposal in sealed cover given to SC by Kingfisher Airlines, that Vijay Mallya has indicated his willingness to repay around Rs 4,000 crore loan to banks by September this year

By: | Mumbai | Updated: March 30, 2016 3:51 PM
Two senior bankers who are part of the consortium confirmed Mallya had approached lenders through one of his companies asking for a settlement by paying Rs 2,000 crore. (Reuters)

Vijay Mallya has indicated his willingness to repay around Rs 4,000 crore loan to banks by September this year – earlier, FE Exclusive story had indicated he was willing to pay Rs 2,000 cr. (Reuters)

Kingfisher Airlines chairman Vijay Mallya on Wednesday informed the Supreme Court through a sealed envelope his willingness to repay Rs 4,000 crore to an SBI-led consortium by September. A bench comprising Justices Kurian Joseph and R F Nariman allowed the consortium of banks a week’s time to respond to the proposal and posted the matter for further hearing on April 7.

In an emailed statement, SBI said, “In respect of dues of Kingfisher Airlines to the consortium of Banks, State Bank of India has received an offer for settlement of dues on Wednesday which is being examined.” Appearing for Kingfisher and Mallya, C S Vaidyanathan said that the copy of the proposal was given to the consortium of banks on Wednesday.

He also requested the bench that the proposal should be kept in a sealed cover for the time being, as negotiations were going on for the settlement and media hype could vitiate the atmosphere.

FE had earlier reported that Mallya offered to pay Rs 2,000 crore to settle all claims. However, the consortium of lenders led by State Bank of India (SBI) turned down the offer saying they were not willing to take a haircut. Kingfisher Airlines (KFA), now declared a wilful defaulter by multiple banks, owes lenders Rs 6,963 crore.

Two senior bankers who are part of the consortium confirmed Mallya had approached lenders through one of his companies asking for a settlement by paying Rs 2,000 crore. “We cannot accept such a small amount and have rejected the proposal,” they had said.

 

While bankers have been making all efforts to recover their money despite facing some legal hurdles, the Enforcement Directorate has initiated an investigation into his financial affairs, suspecting malfeasance. The ED has summoned Mallya to appear before it and the businessman, currently in London, is expected to appear before the investigative agency by April 2.

A recent auction of Kingfisher Airline’s corporate office in Mumbai flopped without attracting a single buyer, ostensibly because the reserve price was too high. The auction was part of the recovery initiative using the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002. Another assets that banks have been trying to get possession of is Kingfisher Villa in Goa. However, they have been unsuccessful so far facing legal hurdles in the local court.

Kingfisher House, pledged to a consortium of 17 banks has been the bone of contention between banks and the I-T department with both claiming their right to possess the property. In 2013, the I-T department had moved a Bangalore court asking lenders to first settle the dues of the department amounting to Rs 350 crore as the property was attached under the I-T Act. The IT department claimed Kingfisher Airlines Limited (KAL) had deducted tax at source from employees’ salaries and other payments but  had failed to deposit the amount with the government entity.

Mallya has blocked bankers’ attempts to attach the villa in Goa claiming United Spirits (USL) has been a tenant since 2005 and consequently, banks cannot sell the property without its approval. Kingfisher Airlines has been grounded since October 2012 and bankers have recovered just a fraction of their dues by selling securities pledged to it.These include real estate and shares in multiple group entities. Banks had also sold around four lakh shares of USL pledged with them for Rs 104 crore in 2014.

Gr4

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    aonk
    Mar 30, 2016 at 8:17 am
    Sucker does have money but doesn't want to pay. Bargains as per advice of his political mentors. Put him in jail and sell all his worldwide ets .
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      T R
      Mar 31, 2016 at 5:01 pm
      If Vijay Mallya's offer is accepted by banks will they accept an offer of 50 per cent of outstanding loans by the young borrowers who took loans for pursuing their higher education? Why can't the RBI, GoI and the consortium of banks introduce a concession of 50% on the oustanding liabilities of all educational loans? They have a more legitimate claim particularly because of poor job market today. With fewer campus placements and fewer market intakes of qualified professionals the student borrowers will have more serious problem than Vijay Mallya had.
      Reply
      1. J
        Jagdip VAISHNAV
        Mar 31, 2016 at 3:22 am
        Recently Indian Prime Minister as well as finance Minister had issued statement that ,Govt shall recover each penny from willful defaulters , here Vijay Mallya has offered hardly 50 % of total Bank dues. Why Public should loose their hard earned money ,
        Reply
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          Mahalingam Challa
          Mar 30, 2016 at 8:53 am
          Is it the case of mere wilful defaulter?What is the role of bankers who kept quite all these years?How the Chartered Accountants audited the balance sheets of defaulter as well bankers?These needs to be investigated thoroughly and take action on officials and auditors so that it will not repeat again in Indian Industry
          Reply
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            ashok kumar
            Apr 7, 2016 at 4:55 am
            Govt. & Banks must outright reject the offer,else,it will set a bad precedent for future loan takers & anyone taking loan will after sometime declare bankruptcy and offer to pay part amount.This guy must be arrested,jailed and recovery must be done to maximum possible extent.If full amount is not recovered let the accused remain in jail throughout his life & must not be let out even on medical grounds.Apart from this even the officials responsible for wrong appraisals and sanction must also be jailed and all their properties & wealth be attached.Such must be our law that in future the lenders and takers both think twice while cheating and playing fraud with public money..
            Reply
            1. J
              jay
              Mar 31, 2016 at 2:47 pm
              if a loan was taken by a common man would he dare to make such an arrogant offer? which means a loan if taken 1000s of crores the lender is at the mercy of the borrower & the borrower can dictate to goI. whether a man who has not paid his employees for more than a year, not paid to the Govt the taxes that he has collected, not repaid loans - & does not have any regret about all this & shamelessly celebrates his bday extravagantly spending crores of rupees does he deserve any respect, any sympathy, no liniency. he should be arrested & his propoerties confisicated. is subrata roy can be jailed & his ets used for paying back money why should mallya be trated differently & WHO are all the BIG people who allowed him to escape & continue to protect him ??
              Reply
              1. D
                dsfds
                Apr 1, 2016 at 10:27 am
                who killed kingfisher decide goo gl YuVmIp
                Reply
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                  Nathan
                  Mar 30, 2016 at 10:31 am
                  Vijay Mallya is made to look like a swindler by most of the TV and other media. He is always shown in the company of models, who were in fact Kingfisher calendar models. The media often highlights his mansions and his various other ets abroad. But all these ets were there much before his venture into Kingfisher Airlines. He has not diverted the loans from banks to acquire any of those ets. Kingfisher Airline is a venture that failed. Today, Air India owes to the banks 45,000 crores and their aculated losses are over 33,000 crores. What about that, is this not the taxpayers money? If he has made an offer to pay 4000 crores, the banks should be happy. This 9,000 corres that the banks talks about may be including compounded interest and penal interest. According to media reports the banks have already written off 215,000 crores as bad debts! Who are these others. Among them there are swindlers who vanished after mobilising funds through IPOs. Let the media investigate those major defaulters.
                  Reply
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                    Vijay Vasudev
                    Mar 30, 2016 at 7:38 am
                    what have the bankers been doing for last four years . they have not filed asingle case against him it is a joke . now they want time to study the proposal. just lock them the bankers in a room and open the doors after they find a solution . they bankers are the mail culprits .
                    Reply
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