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