The Insolvency and Companies Court of the London High Court declared fugitive Indian businessman Vijay Mallya bankrupt on Monday. Even though the order goes into force right now, he has the option of seeking permission to appeal from a higher court.
“Because there is no evidence that he would return to India to face trial, I believe there is inadequate proof that he will pay the amount in full within a reasonable time.” Briggs, the top judge of the Insolvency and Companies Court (ICC), pronounced Dr. Mallya bankrupt late Monday afternoon.
The 65-year-old UB Group chairman, who lost all of his court battles against extradition to India in May 2020 but has yet to return. Mallya must now hand over all of his assets, including his bank and credit cards, to a bankruptcy trustee, who will investigate his affairs and determine his true assets and liabilities value to sell relevant assets and repay creditors.
The person who has been declared bankrupt is required to work with the trustee. Except for money to buy necessities, all of his bank accounts will now be frozen. He is prohibited from acting as a director of a corporation or forming one without the authorization of the court, as well as borrowing more than £500 without declaring bankruptcy.
Mallya’s lawyer, Philip Marshall QC, had his request for a stay of the bankruptcy and permission to appeal denied by Judge Briggs, who ruled they had no realistic chance of succeeding.
Mallya was being sued by a consortium led by the State Bank of India for failing to pay a judgment debt of £1.05 billion (Rs 10,763crore) that was assessed by Karnataka’s Debt Recovery Tribunal in January 2017 which was later lodged in English courts. The debt stems from Mallya’s guarantee on loans to Kingfisher Airlines.
Marshall contended in the high court’s Insolvency and Companies Court that the bankruptcy petition should be dismissed because Indian banks got Rs 5,776.2crore from the DRT sale of Mallya’s UBL shares in India, the majority of which were sold on June 23, 2021.
Additional Rs 770 crore had been realized through the sale of shares but had not yet been handed to the banks, bringing the total amount paid to Rs 6,546.2 crore.
However, Briggs declared bankruptcy, claiming that the banks had not been paid unconditionally and that there was no guarantee that any amounts recovered would be allocated to the petitioners because the liquidator was not obliged by the PLMA. “Banks could not utilize the money freely unless Mallya returned and faced criminal charges” he added.
“He is reportedly refusing extradition, according to my knowledge. The petitioners could be forced to refund the money after the trial because the May 24 order was contested by nine parties, including Mallya, and there are 40 creditors. There’s a good chance the liquidator will demand that all of the earnings from the UBL sales be handed to him so he can pay the creditors” the judge, stated.
