The e-auction of Kingfisher Villa in Goa failed as no buyer bid for the property, sources told FE. Sources with knowledge of the development said SBICAP Trustee has not received the earnest money deposit (EMD) from any interested buyer, and therefore the auction has failed.
The last date for submission of bid application documents, EMD amount and KYC documents was October 17 (within 5 pm). Bidders were required to submit 10% of the reserve price or R8.5 crore as the EMD amount. The reserve price for the property was R85.29 crore.
Prospective buyers were allowed to inspect the property on September 26-27 and on October 5-6. “Although six interested buyers, including owner of a prominent media organisation, had inspected the property, no one bid for it,” a banker said, adding that lenders will call for another auction in a couple of months.
Kingfisher Villa, owned by United Breweries Holdings, was mortgaged as a collateral for loans given to Kingfisher Airlines. Kingfisher Airlines, which has not flown since October 2012, owes around R6,963 crore to a consortium of 17 bankers who have been trying to recover their money partly by selling securities pledged with them. These include real estate and shares in multiple group entities.
The auction was part of the process of recovery of dues from the airline’s promoter, Vijay Mallya, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002.
Earlier in March and August this year, e-auction of Kingfisher House – Kingfisher Airline’s corporate office in Mumbai – had failed as no buyer approached SBICAP. While the first auction had a reserve price of R150 crore, the second auction had set it at R135 crore.
The case highlights problems faced by public sector banks while recovering money from defaulters. Bankers say the legal process is a long and tedious one, adding that promoters often resort to delaying tactics approaching one court after another.
At present, regulations require state-owned banks to set a reserve price and call an auction to dispose of an asset. If the first auction is not successful, a new reserve price must be fixed and a second auction called before a bilateral negotiation can begin.