PNB declares Vijay Mallya’s UB Holdings willful defaulter
Company is estimated to have given a corporate guarantee that amounted to Rs 800 crore-Rs 1000 crore.
State-owned Punjab National Bank has declared Vijay Mallya’s UB Holdings a willful defaulter, signaling the start of long-drawn legal recovery measures against the company.
“A willful defaulter is one who doesn’t pay on his loans when he has the wherewithal to pay. We also have some patience limits. We waited and gave an opportunity to the promoter to come forward and pay. Inspite of having the wherewithal, if you refuse to pay, you have to be declared a wilful defaulter,” PNB CEO Usha Ananthasubramanian told Hindustan Times.
While PNB did not quantify the extent of holdings, it is estimated that UB Holdings gave a corporate guarantee that amounted to Rs 800 crore-Rs 1000 crore.
Reacting to PNB’s move, UB Holdings in a statement said: “Punjab National Bank vide its letter dated February 11, 2016, received by the company on February 15, 2016, has declared the company as a ‘willful defaulter’. The company is in consultation with its legal counsels to challenge the decision by taking appropriate legal action that may be required in this regard.”
This is the second time that the group has been declared willful defaulter. In November 2014, SBI had declared UB, subsidiary Kingfisher Airlines and flamboyant promoter Vijay Mallya as willful defaulter. This action too was challenged by UB Holdings.
Shares of UB Holdings plunged 10% immediately after news of PNB’s action was announced. At 12:47, the UB Holdings stock was trading down 8.5% at Rs 20.75.
PNB’s legal recovery action could likely include approaching the Debt Recover Tribunal which typically raise funds by liquidating the company’s assets pledged with the bank.
Incidentally, a banks’ consortium led by SBI is scheduled to auction the Mumbai-based Kingfisher House on March 17, in a bid to recover the Rs 6,963 crore that Kingfisher Airlines owes in debt to the banks.