United Breweries (Holding) Ltd. (UBHL), on Monday, suffered yet another setback with a Division Bench of the Karnataka High Court observing that there was a need to expedite the process of hearing the pleas for winding up of UBHL and Kingfisher Airlines Ltd. (KAL) as the issue involved recovering Rs.6,500-crore worth public money due to various banks from the company.
BNP ParibasThe Division Bench, comprising Justice N. Kumar and Justice Rathnakala, made the observation in its order while rejecting the appeal filed by UBHL, questioning the single-judge bench’s November 19 order of admitting plea of French bank BNP Paribas for winding up of UBHL.
BNP Paribas had sought liquidation of UBHL to recover Rs.203 crore. UBHL had given corporate guarantee to KF Aero, which acquired three aircraft by borrowing money from BNP Paribas and leased the aircraft to KAL, promoted by UBHL.
“Staying the process will give an impression that the courts are coming in the way of recovering around Rs.6,500 crore public money due to 15 banks, including State Bank of India (SBI), from the company,” the Bench said, while refusing to keep in abeyance its order of upholding single judge bench’s decision.
A counsel for UBHL sought staying the Monday’s order while pointing out that if the order was not stayed, then BNP Paribas could issue public notice in newspapers on December 17 when the four-week time given by the single bench would expire on Tuesday. Noticing that many pleas, including the one by the consortium of banks led by SBI, have been filed for winding up of UBHL, the Bench said that prima facie it was of the view that the company would not be able to discharge its liabilities as it had been contended that its liability was about Rs.9,000-10,000 crore, and the value of its assessed assets was only around Rs.6,000 crore.
Observing that courts would have to be circumspect in their decision when protecting the interest of creditors, and more particularly in this case because it involved huge public money, the Bench said that the single judge bench would have to take a final decision on the winding up pleas after assessing the commercial solvency of UBHL on considering the claims of all the creditors before the court and the company’s assets and liabilities.
