In a major victory for Indian banks, the Insolvencies and Companies Court of London High Court on Monday declared runaway businessman Vijay Mallya insolvent as per British laws. This will completely free the way for Indian banks led by the State Bank Of India to look for an overall freeze on Mallya’s Indian assets for recuperating the debt owed by his non-operational Kingfisher Airlines.
According to British law, an insolvency trustee assumes responsibility for a bankrupt individual’s monetary and actual resources.
“As at 15:42 (UK time), I adjudicate Mr Mallya bankrupt,” Chief Insolvencies and Companies Court (ICC) Judge Michael Briggs said in his ruling during a virtual hearing of the Chancery Division of the High Court in London.
The Indian banks, appeared by the firm TLT LLP and barrister Marcia Shekerdemian, had insisted for the insolvency order to be granted in favour of them.
As per British laws, a bankruptcy trustee takes effective control over all the bankrupt person’s financial assets including his physical assets, such as credit, debit cards, bank accounts etc. to reimburse the debtors. As long as the person is on the bankrupt list, there is a curtailment on personal spending by the insolvent person. If that person needs to engage in trading ventures, he/she will need to take permission from the court.
“The obvious consequence is the likelihood of freezing of bank accounts and attachment of assets. Mallya would be required to hand over his assets. A further assessment of such assets against documented liabilities appears to be the natural and immediate consequence,” said Faisal Sherwani, partner at a law firm, L&L Partners.
Mallya, however, attempted to appeal the decision of the High Court, but was denied to do so.
After the decision, Mallya launched a diatribe on Twitter as he accused the lenders of pushing him to bankruptcy, “ED attach my assets worth 14K crores at behest of Govt Banks against debt of 6.2K crores. They restore assets to Banks who recover 9K crores in cash and retain security over 5K crores more. Banks ask Court to make me Bankrupt as they may have to return money to the ED. Incredible.”
The 65-year old businessman will stay in the UK on bail pending the decision of a “secret” court matter, which is of the opinion that he is seeking asylum, in connection to unrelated deportation proceedings.