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Kolkata-based United Bank of India (UBI) has filed a petition to wind up Vijay Mallya-promoted United Breweries (UB) Holdings in the Karnataka High Court, after Kingfisher Airlines (KFA) defaulted on the loan. The lender had the corporate guarantee of UB Holdings for the loan, which was extended to the grounded airline. On failure to honour the guarantees, as KFA defaulted on loans, the petitioner has invoked the guarantees. Banks can invoke these if the principal creditor defaults.
UBI is the first lender to file a winding-up petition, though some of the lessors of aircraft had filed similar petitions.
The petition, filed on March 19, is pending for admission in the court. The government-owned lender has an exposure of about Rs 400 crore, including both guarantees and loans.
The move came after Finance Minister P Chidambaram, at a meeting with chiefs of public-sector banks recently, asked lenders to act tough on corporate defaulters. “We cannot have an affluent promoter and a sick company,” he had said. Confirming the development, a senior UBI official said the bank would be aggressive in loan recovery.
In October last year, the Directorate General Of Civil Aviation had suspended the airlines’ operating permit, which expired in December.
Banks had started classifying the KFA account as non-performing from the third quarter of 2011-12. A large part of the loan was unsecured, so most made 100 per cent provisioning for exposure.
