Mallya and six other companies owned by the family had supported a “robust and bona fide offer” made by UBHL before the HC. These “companies, which were in no way liable for the alleged debts of UBHL, have also voluntarily offered their assets amounting to Rs 3,051.04 crore as on January 17, 2020.
Vijay Mallya’s United Breweries (Holding) (UBHL) on Thursday offered to settle Rs 14,518-crore liabilities with the consortium of 14 banks and others, saying the bankruptcy and winding up laws are aimed at keeping “alive the viable companies while ensuring that creditors are paid back.” “This bona fide offer of Rs 14,518.02 crore (as on January 17, 2020) is required to be viewed in the context of the banks having already recovered Rs 2,877.55 crore till date leaving a balance due, at the highest of Rs 5,958.97 crore, given that all the assets of UBHL stood attached by ED in June and September 2016,” UBHL said.
“It is difficult to comprehend the rationale of the banks not to realise their debts on court directed and court monitored sale of attached assets and those which had been offered…,” the appeal stated, adding that the proceedings under the Insolvency and Bankruptcy Code in the last three years have seen the creditors taking a haircut of the entirety of the interest and up to 85-90% of even the principal amount.
UBHL on Thursday moved the Supreme Court against the Karnataka High Court’s March 6 order that upheld the winding-up order passed in February 2018 for its failure to pay admitted liabilities to unsecured and secured creditors as per the corporate guarantees extended to defunct Kingfisher Airlines.
Mallya and six other companies owned by the family had supported a “robust and bona fide offer” made by UBHL before the HC. These “companies, which were in no way liable for the alleged debts of UBHL, have also voluntarily offered their assets amounting to Rs 3,051.04 crore as on January 17, 2020, to repay the debts of UBHL – it would have resulted in a greater share/pool of assets being made available for disposal amongst the legitimate creditors of UBHL and would have necessarily benefitted all such creditors,” it stated.
“This was more than adequate to clear the entire liability. Unfortunately, the offer has not even been considered. The object of the laws relating to bankruptcy and winding up of companies is to keep alive the viable companies while ensuring that the creditors are paid back their monies,” UBHL stated while objecting to “piecemeal sale” of its assets.
A Bench led by justices UU Lalit and Vineet Sharan on Thursday asked whether the UBHL’s assets that have been attached by the ED under the Prevention of Money Laundering Act (PMLA) against Mallya can be sold for settlement of debts and laibilities.
“Once assets are attached, does that mean these assets cannot be considered to be part of proceedings when company is considered for winding up? Normally, winding up of a company is avoided if possible,” Justice Lalit said.
Senior counsel CS Vaidyanathan, appearing for UBHL, argued that the company’s assets were greater than its liabilities, and therefore its winding up may not be ordered.
While lenders had claimed recovery of debts assessed by DRT at Rs 4,999 crore (principal sum), UBHL had assets valued at about Rs 8,500 crore, he said. “Satisfy our conscience when the banks are themselves in appeal against the attachment orders, why should we not examine what he (Vaidyanathan) has to say?” the bench told Solicitor General Tushar Mehta, who was representing SBI.
Raising the issue of national interest, the SG argued that under the PMLA, criminal proceedings take place, and Mallya would be prosecuted. In the event the attached properties are found to be proceeds of crime, they are liable to be confiscated and cannot be used for settlement, the SG said.