New Delhi - Vijay Mallya had made an offer of repaying a little over Rs 4,000 crore to lenders through a convoluted set of transactions, which were ultimately rejected by them.
It seems as late as last night, his lawyers reiterated that the offer should be accepted but made no changes to the initial offer. The consortium of banks stuck to its resolve, however, and rejected it again at a hearing in the Supreme Court this morning.
Many wise men have been doubting the sagacity of banks in refusing whatever pittance Mallya had agreed to pay - he owes over Rs 9,000 crore in all - but it now emerges that Mallya's offer was an empty one. In more ways than one.
Not a single rupee was offered in cash, almost every amount was offered via settlement of an existing dispute or through pledged shares of a group company.
According to sources, Mallya's offer was structured thus:
1) Lenders be given Rs 650 crore from the money deposited in the Karnataka High court for an earlier proceeding over sales of United Spirits' shares
2) Another Rs 300 crore worth of USL shares pledged by KFIL
3) Rs 1,100 crore worth of USL shares pledged by UBSL
4) Rs 688 crore which Airbus is expected to shell out as per a dispute between Kingfisher Airlines and the aircraft manufacturer in DRT Bangalore
5) Another Rs 1400 crore through pledged shares of UB held by UBHL.
A spokesperson for Mallya declined to offer comments for this story.
Anyway, it is no wonder that the lenders' consortium formally rejected this offer in the Supreme Court on Thursday. It sought a "substantial" amount from Mallya instead, in hard cash.
But the lenders have not specified what this amount should be. The court has directed Mallya to deposit this substantial amount to prove his bonafide. It has also sought the presence of the liquor baron in the next hearing on April 26. Besides, the court has also sought details of all assets held by Mallya and his family in various business entities, in both India and overseas.
The consortium of banks has not specified what amount it actually wants from Mallya now but it is clear that the banks want all of the principal amount - close to Rs 6,000 crore - and some of the interest amount upfront for any other repayment offer to be considered.
It is obvious that any one-time settlement with a wilful defaulter like Mallya would mean the consortium has to write off the remaining amount - this makes it all the more important for lenders to push for as much recovery as possible and make this recovery in a tangible fashion.
According to a Times of India report, Mallya and his firms told the apex court on 31 March that they were ready to pay Rs 2,000 crore upfront and over Rs 2,000 crore by September 30 and placed a proposal in a sealed envelop before a bench of Justices Kurian Joseph and R F Nariman.
The banks were represented in the SC on Thursday by legal counsels Shyam Divan and S S Naganand and Robin David, partner at Dua & Associates.
According to a report in The Economic Times, Mallya's lawyers C S Vaidyanathan and Parag Tripathi said he would make a full disclosure of his assets as directed by the apex court.
The story went on to say that the two counsel opposed disclosing the assets of his wife and children but were directed to do so by 21 April. They also said that Mallya was willing to deposit money, provided the court so directs.
"There's no liquid money. Everything is tied up in contingencies. We will need court orders to pay," Vaidyanathan said. He also agreed to say when Mallya would appear court at the next hearing.