Lenders have written to Kingfisher Airlines chairman Vijay Mallya’s legal counsel and separately to Kingfisher Airlines offices in Bengaluru, rejecting a proposal to repay Rs 4,000 crore. According to a senior banker, the letters have already been couriered, emailed and will also be delivered by hand.
The banker said the lenders are looking for a repayment of the principal outstanding of around R5,000 crore and more than half the interest of Rs 2,500 crore. “We are expecting Rs 7,500 crore and are willing to discuss this with the Kingfisher management,” he said.
Another banker said that the Rs 4,000-crore settlement plan does not make sense because Mallya wants banks to deduct the Rs 544 crore recovered through sale of shares from the total outstanding, which has been already deducted. “When we had filed the debt recovery tribunal (DRT) suit, we had already deducted the recovered loans and that cannot be adjusted again. So his actual offer is only Rs 3,456 crore,” the banker explained.
Apart from the Rs 4,000 crore, Mallya has offered another Rs 2,000 crore depending on the outcome of a case filed against Airbus Industries.
Last week, Mallya had submitted a detailed repayment plan to the Supreme Court, saying he would repay `4,000 crore of bank loans. Kingfisher Airlines, which was grounded in October 2012, owes lenders close to `9,000 crore. A bench comprising justices
Kurian Joseph and RF Nariman posted the matter for further hearing on April 7.
Appearing for Kingfisher and Mallya, CS Vaidyanathan had said that the copy of the proposal was given to the consortium of banks. He had also requested the proposal be kept in a sealed cover for the time being, as negotiations were going on.
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 and the businessman, currently in London, is scheduled to appear before the investigative agency on April 9.
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, 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 income tax department with both claiming their right to possess the property. In 2013, the I-T department had moved a Bengaluru court asking lenders to first settle the dues of the department amounting to
`350 crore as the property was attached under the Income Tax Act. The I-T department claimed Kingfisher Airlines 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. Bankers have recovered just a fraction of their dues from Kingfisher Airlines by selling pledged securities.