Vijay Mallya kicks bankruptcy into the long grass again

LONDON: Indebted liquor tycoon Vijay Mallya escaped being made bankrupt in the high court in London by a whisker on Tuesday after the judge was persuaded that Mallya’s ongoing proceedings in the Indian courts could render the judgment debt against him invalid for the purpose of making a bankruptcy order.
Chief Insolvency and Companies Court (ICC) judge Briggs adjourned making the bankruptcy order to allow for another day of arguments on July 26 after Mallya’s lawyer, Philip Marshall QC, pointed out that Mallya had an interest rate challenge in the Karnataka high court and a compromise settlement proposal in the Supreme Court of India, and claimed that both could discharge the debt he owes.
On July 26 the parties will argue whether the application for the imposition of a compromise settlement in India renders the judgment debt invalid for the purposes of making a bankruptcy order.
"Justice Deepak Verma says the compromise proceedings and interest rate challenge have a reasonable prospect of success," Marshall said, referring to the testimony of the retired SC judge acting as expert witness.
"That would discharge the entire debt. There are other assets too, not only of Mallya and UBHL, but various companies owned by family members that would put assets forward to dispose of the debt," Marshall added.
A consortium of Indian banks is seeking to make the Indian entrepreneur bankrupt in the ICC so that a bankruptcy trustee may be appointed to investigate his worldwide assets and claw back the Rs 11,000 crore he owes them by virtue of personal guarantees he provided for loans given to Kingfisher Airlines.
"Why can’t a bankruptcy order be made today?" Briggs asked. "After four hearings what is it that still need to be decided? There is no reason for it to not be made as I have given permission for the bankruptcy petition to be amended and it has been amended."
Marcia Shekerdemian QC, representing the banks, said: "We need closure on this and it’s wrong for a bankruptcy petition to stay on the court file so long. Even if the petition debt is halved by his interest rate challenge, his assets won’t be sufficient to pay us in full. UBHL is in liquidation and those assets are not within the gift of Mallya or his associates or UBHL to deal with, so his ‘compromise settlement proceedings’ are going nowhere. All he is doing is asking for more time and the end may never be sight. It is time for this court to … bring this bankruptcy to its inevitable end."
On Tuesday Briggs handed down judgment which allowed the banks’ amended bankruptcy petition in which they said they are willing, in the event of a bankruptcy order being made, to give up any security they held over Mallya’s assets for the benefit of all the creditors. The banks estimate that the value of that security they hold over Mallya’s assets is around £230 million (Rs 2,386 crore). Mallya was refused permission to appeal this judgment.
"There are a number of people he would like to pay legal costs to but is inhibited because of the bankruptcy proceedings, which are much more restrictive than the freezing order," Marshall said. "Mallya hasn’t had the funds to instruct his Indian lawyers. We want an order for costs to be provided to his Indian representatives, which will greatly facilitate further progress of the Indian proceedings," he added.
He also pointed out the court process in India was substantially disrupted by Covid and another matter was "the question of motivation of the petitioners" given the "political background to proceedings".