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An indecent offer
Vijay Mallya, chairman of the now defunct Kingfisher Airlines, has finally come to the negotiation table and is willing to settle his claims for Rs 4,000 crore. The amount is less than half the Rs 9,000 crore he owes to a consortium of banks, which contains nearly Rs 6,963 crore in borrowed principal.
Banks to study 4K-cr settlement offer
New Delhi: Vijay Mallya, chairman of the now defunct Kingfisher Airlines, has finally come to the negotiation table and is willing to settle his claims for Rs 4,000 crore. The amount is less than half the Rs 9,000 crore he owes to a consortium of banks, which contains nearly Rs 6,963 crore in borrowed principal.
Banks have asked the Supreme Court for time to consider the proposal. There is no reason for banks to settle for half the amount and set him free of the liability. Mallya has never shown serious intent to repay money to banks. The consortium of banks has earlier turned down the Rs 2000-crore settlement offer from Vijay Mallya. The 17 banks, who are claiming over Rs 9,000 crore according to documents submitted in the Supreme Court, turned down the offer that is barely a fourth of the total dues.
If banks settle for less than half of what is due to them from Mallya, this will set a dangerous precedent for other large corporate defaulters. Other companies can also move the Supreme Court and make similar proposals citing the Kingfisher case to come out of their debt.
Mallya, it seems, is arguably showing his willingness now to pay up after he has run out of all options to avoid repayments. While it’s good that Mallya is willing to settle the issue of his dues – but there are many things which raise doubts in the minds of the banks:
Is Mallya buying time by making such offers to banks? Earlier, it had been reported that Mallya had offered Rs 2,000 crore as a settlement amount, but when the bankers rejected the offer he increased it to Rs 4,000 crore.
If the former liquor baron had the money, why did he leave the country? It seems money is not the only problem Mallya is facing. He has been pulled up by the court in a money laundering case, too. Irrespective of the fact that he repays the banks, he might face punishment under provisions of Prevention of Money Laundering Act.
The King of Good Times left the country leaving the 17 banks that aided his now defunct airline in terrible shape and when investigative agencies in the country, including the CBI and the ED, are probing his loan default, banks have filed multiple cases against him in various courts.
Further, Mallya did not pay salaries of his employees. Nor did KFA pay forward the income tax deducted at source from employees, which was the first trigger for the airline’s accounts being frozen. It was comparatively a smaller amount and he could have taken an honourable exit. But he did not. Why?
Will the bankers get away scot-free by recovering at least part of the money owed them? Banks have lent at irrational valuations. They are partly to be blamed for the mess they created for themselves. Will a settlement mean that roles of all those involved in clearing the loans will be settled too?
