UBHL says settlement offer credible, counters banks’ view

Denying that its settlement offer is a “ploy to derail” the recovery process, Vijay Mallya’s firm United Breweries (Holding) Ltd (UBHL) on Wednesday reiterated before the Supreme Court that its attached assets worth Rs 14,518 crore are sufficient to meet the liability of the SBI-led consortium of banks.

The settlement offer is the only proposal that will result in UBHL being kept alive by determination and discharge of the dues of the creditors including banks, UBHL senior counsel CS Vaidyanathan told the Bench led by Justice UU Lalit.

The apex court will next hear the matter on October 5.

While the SBI-led consortium of 14 banks had alleged that the UBHL liabilities (as on August 31, 2020) exceeds Rs 11,179 crore and are far in excess of its assets (Rs 4,968 crore), UBHL told the apex court that its balance dues are around Rs 5,958.97 crore after deducting Rs 2,877.55 crore that have been recovered from sale of its assets by the banks. “However, this does not take into account the well known fact that these very same banks have repeatedly agreed to take significant haircuts, not only in interest amounts due, but even the principal sum due from publicly listed corporate creditors similar to UBHL in proceedings under the IBC,” the UBHL affidavit stated.

The lenders had earlier rejected the UBHL’s settlement offer of Rs 14,518.02 crore, saying the proposal is neither “bonafide” nor “genuine” and the liabilities are far in excess of its inflated assets.

In a “malicious” attempt to inflate the valuation, the Mallya company has included the assets (under the Enforcement Directorate’s attachment) which have been already sold by the banks and duly accounted for, therefore, the calculation is “misleading and exaggerated,” SBI had told the Supreme Court.

Stating that the banks continue to proceed on the incorrect footing that the appeal has been filed by Mallya personally, UBHL said that it is incorrect that Mallya is at the helm of UBHL. Even prior to the winding up order of February 7, 2017, Sebi had on January 25, 2017 restrained from holding a position as director or key managerial personnel of any listed company and UBHL till the winding up order was a public listed company, UBHL said, adding that various proceedings being faced by Mallya personally do not have any bearing on the composite offer.

It is surprising that banks continue to oppose a court-monitored sale of assets which form part of the offer, UBHL said, adding that apart from the interests of its creditors, the interests of 47,732 shareholders, its 117 staff and promoters (as on February 2, 2016) must necessarily be taken into consideration before deciding its fate.

The ED had in June and September 2016 passed two provisional attachment orders attaching all the assets of UBHL, Mallya and the contributory companies as alleged proceeds of the crime under the Prevention of Money Laundering Act 2020. UBHL stated that the lack of merits of EDs attachment orders is best demonstrated by the fact that lands acquired as far back as 1902 are sought to be attached as proceeds of crime in relation to loans advanced in 2009.

UBHL had appealed 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.