Vijay Mallya fled the country six years back after facing pressure from banks to repay as much as Rs 9000 crore in loans. He became India’s most high profile economic offender, who has managed to evade extradition so far and is now trying to seek asylum in the UK. But shareholders of McDowell Holdings formerly owned by Mallya are alleging that he is trying to take control of the company using proxy firms.
Trouble brewing over another default
Mallya had stepped down as the non-executive chairman of McDowell Holdings, which had a 4 per cent stake in UB limited, in 2013 for undisclosed reasons.
Trouble started for the firm when it defaulted on a sum worth Rs 16.8 crore owed to Sun Star Hotels and Estates, which took the firm to National Company Law Tribunal (NCLT), which initiated insolvency proceedings. But minority shareholders of the company are claiming that even though they offered to pay back the amount to Sun Star, it refused and insisted on selling McDowell through the IBC process.
The debt resolution plan by Phoenix Theme Infra Projects was approved, but shareholders claim that the creditor Sun Star is acting on behalf of Mallya. They added that the company plans to exploit loopholes in IBC to help Mallya take over the company again. The shareholders are now seeking intervention by the Supreme Court, which will hear the matter on September 22.
Loopholes in IBC?
In previous cases it has been seen that in the absence of successful bids for a company undergoing insolvency, creditors accept a one time settlement, and promoters can get away by paying a part of the sum owed. McDowell’s 47,000 shareholders, who own liquid assets worth Rs 1,000 crore, claim that Sun Star is part of Balaji Distilleries group, which has connections to Mallya’s firms. They also highlighted that Sun Star, Balaji and Phoenix are all from Chennai.
On the other hand, Vijay Mallya has reportedly told Money Control that he has no connection to McDowell since he left and doesn’t even know who the directors are.
