In a major setback to liquor baron Vijay Mallya-led United Breweries Holdings Limited (UBHL), the Karnataka High Court admitted the winding up petition filed by corporate banker BNP Paribas.
The court has directed BNP Paribas to take out a newspaper advertisement in effect to this order after four weeks. The high court has observed in its order stating that the corporate banker is entitled to claim the corporate guarantee provided by UBHL in spite of recovery proceeding pending in English courts. This petition is not barred by limitation.
Strongly wording its order, the HC has said that in spite of being served valid notices, UBHL failed to pay its dues to the bank. The admission of the petition only makes the case stronger against UBHL as BNP Paribas’ claim amount is much lower than other stakeholders which include the bankers consortium, valued in thousands of crores.
The corporate banker had filed their winding up petition last November over defaults by UBHL promoted Kingfisher Airlines (KfA) over unpaid dues of `146 crore (now close to `200 crore). The carrier has been grounded since October 2012 after employees intensified their protests against non payment of salaries dues.
KfA has dues and debts of over $2 billion. Both secured and unsecured creditors of the airline had filed winding up petitions against the holding company as UBHL had stood as guarantor in many cases when funds were raised from both secured and unsecured creditors. Currently there are over two dozen petitions being heard by different benches of the Karnataka HC as well as other courts across the country which includes some by former and present employees over unpaid salary dues among other issues.
The direction by the high court is likely to have repercussions on the already concluded stake sale between UBHL promoted United Spirits Limited and world’s largest spirit maker Diageo.
The UK-based spirit maker had in November 2012 proposed to buy 53.4 per cent of USL for an estimated `11,165 crore. However, due to the failed open offer, this deal concluded with Diageo owning 25.02 per cent for `5,235 crore. The admission of the winding up petition would add more scrutiny to the way any company deals with their assets.
Though it remains unclear about the impact this will have on the deal, a winding up petition comes into effect on the date of filing. In this case, BNP Paribas had also filed their petition in November 2012; around the same time when Mallya announced the USL stake sale. During the AGM of KfA in September 2013, Mallya had also hinted that they were talking to a ‘foreign’ investor to fund the revival of KfA which could jeopardise talks between the two parties.
