BackUnited Bank names Vijay Mallya’s UBHL as a wilful defaulter
The bank has already declared grounded airline Kingfisher Airlines Ltd as a wilful defaulter
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United Bank of India has named United Breweries (Holdings) Ltd (UBHL), the holding company of UB Group, as a wilful defaulter, adding to the woes of group chairman Vijay Mallya.
“We have already declared UBHL as wilful defaulter as it had money to repay the loan as guarantor of Kingfisher Airlines," said Deepak Narang, executive director at United Bank of India.
The bank has already declared grounded airline Kingfisher Airlines Ltd as a wilful defaulter.
Narang did not disclose details, saying “we have a case coming up against UBHL on 4 December at Calcutta high court".
“I will discuss further details after the hearing," Narang added.
On Tuesday, Narang told Press Trust of India that UBHL had additional resources available as per the balance sheet of 2013-14, adding, that these funds could have been used for paying loans given to Kingfisher Airlines.
United Bank’s decision comes a day after UB Group chairman Mallya resigned as director of Mangalore Chemicals and Fertilizers Ltd (MCFL), without citing any reason, a month after a bidding war for shares in the group company ended inconclusively, as pressure piles up on the tycoon who has faced a series of setbacks in recent months.
Also on Monday, UB Group-promoted Kingfisher Airlines said in a filing to BSE that the ministry of corporate affairs had rejected an application for reappointing Mallya as its managing director after the grounded airline and the businessman were declared wilful defaulters by two creditors.
The developments come on the heels of public shareholders of United Spirits Ltd voting against as many as nine related-party transactions between the company and entities controlled by the UB Group in an unexpected show of defiance against ties between the spirits maker and its Indian promoter. United Spirits is controlled by Diageo Plc.
Kingfisher Airlines and its directors, including Mallya, have been declared wilful defaulters by at least two creditors of the airline, which owes more than ₹ 7,500 crore to lenders led by State Bank of India (SBI). However, Kingfisher Airlines has secured a stay from the Calcutta high court on the wilful defaulter declaration by United Bank of India, one of the airline’s several lenders, and is contesting the case.
Kingfisher Airlines hasn’t flown since October 2012. The airline had accumulated losses of ₹ 16,023.46 crore as on 31 March 2013 and its net worth was a negative ₹ 12,919.82 crore. Kingfisher Airlines, launched in 2005, never made a profit. Kingfisher Airlines is now legally fighting the central government’s department of financial services and SBI for a notice served on it in August, alleging the airline had wilfully defaulted on paying dues to the bank.
A default is considered to be wilful when a borrower has not repaid when he can do so; when sanctioned funds have been used for other purposes; when the borrower has siphoned off funds; or when the borrower disposes of the assets pledged for availing the loan without the bank’s knowledge.
SBI, the leader of the consortium, has the maximum exposure at ₹ 1,600 crore, followed by Punjab National Bank ( ₹ 800 crore), IDBI Bank Ltd ( ₹ 800 crore), Bank of India ( ₹ 650 crore), Bank of Baroda ( ₹ 550 crore), United Bank of India ( ₹ 430 crore), Central Bank of India ( ₹ 410 crore), UCO Bank ( ₹ 320 crore), Corporation Bank ( ₹ 310 crore), State Bank of Mysore, an SBI associate bank ( ₹ 150 crore), Indian Overseas Bank ( ₹ 140 crore), The Federal Bank Ltd ( ₹ 90 crore), Punjab and Sind Bank ( ₹ 60 crore) and Axis Bank Ltd ( ₹ 50 crore).
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