Indian lenders to grounded carrier Kingfisher Airlines will start the process to recover as much as 85 billion rupees of dues after owner Vijay Mallya failed to pay the debt.
Lenders of India's grounded Kingfisher Airlines start debt recovery
Indian lenders to grounded carrier Kingfisher Airlines will start the process to recover as much as 85 billion rupees of dues after owner Vijay Mallya failed to pay the debt, the biggest creditor said.
"We have decided to start recovery process on the loans to Kingfisher," Shyamal Acharya, the deputy managing director of State Bank of India, said. "Banks have already given [Mr] Mallya enough time to repay."
State Bank of India has set aside the 15bn rupees it lent to Kingfisher following Mr Mallya's inability to pay the debt. The tycoon in November 2011 pledged to raise money through new loans, a rights offer and property sales to pay debt and avoid grounding of the carrier. Kingfisher Airlines stopped operations 11 months later.
Remedies for the lender "include, going to the Debt Recovery Tribunal, enforcing pledge of movables," said Rabindra Junjhunwala, a partner at law firm Khaitan & Co in Mumbai. The law also "gives certain classes of secured creditors additional remedies, such as attachment and sale of the secured assets of a borrower, taking over management of defaulting borrower."
Prakash Mirpuri, spokesman for Kingfisher Airlines, declined to comment on the lenders move to start the process to recover dues.
The carrier reported a net loss of 7.55bn rupees in three months ended December 31 compared with 4.4bn rupees a year earlier, exchange filings show. The carrier did not have any sales from operations, compared with 13.7bn rupees a year earlier after suspending operations from October 1.
Kingfisher has also defaulted on payments to fuel suppliers and airports as losses widened amid rising fuel costs and price competition
* Bloomberg News