An Indian debt recovery tribunal on Monday stopped heavily indebted liquor baron Vijay Mallya from accessing the $75 million he received from London-based liquor company Diageo PLC as part of a settlement. A consortium of lenders led by the State Bank of India had declared Mallya a willful defaulter last year for nonpayment of dues owed by his now-defunct Kingfisher Airlines.
The court ruled in favor of the consortium, saying that the lenders had a first right on the $75 million severance pay due to be paid by Diageo to Mallya, after he resigned as chairman of Diageo’s India unit, United Spirits. SBI had also filed three other applications, seeking Mallya’s arrest and impounding of his passport, and full disclosure of his assets in the country and abroad, local media reported.
Kingfisher Airlines, which stopped flying more than three years ago, had $1.4 billion in debts as of September 2013, according to media reports.
Mallya, one of India’s most visible and flamboyant businessmen, said he was in talks with banks for a one-time settlement of debt that Kingfisher Airlines owes, adding that he had no plans to run away from his creditors.
The ruling came even as the Indian government stepped up its efforts to rein in bad loans, with central bank Governor Raghuram Rajan and Prime Minister Narendra Modi asking state lenders to clean up their books of about 8 trillion rupees ($117 billion) of stressed assets by March 2017.
Mallya, whose flagship beer brand carries the slogan “King of Good Times,” took over United Breweries Holdings Ltd., known as UB Group, from his father in the 1980s.
“It sends a clear signal to delinquent borrowers that they need to take genuine efforts to repay loans or face consequences,” Karthikeyan P., a Chennai-based analyst at Cholamandalam Securities Ltd., told Bloomberg.