French banking group BNP Paribas compeleted its arguments on Tuesday over a petition it had moved to wind up UB Group United Breweries Holdings (UBHL) for its failure to honour corporate guarantees for loans given on behalf of group company Kingfisher Airlines (KFA).
In its petition filed in the Karnataka High Court, BNP (petitioner) has sought to wind up Vijay Mallya-led UBHL under section 439 (1) (b), read with sections 433 (e) & (f), 434 and 450 of the Companies Act, 1956. BNP Paribas had acquired guarantees from UBHL as a precondition to finance the acquisition of three aircraft for KFA. On failure to honour the guarantees after default by KFA, the petitioner invoked the guarantees.
Section 433 of the Companies Act deals in circumstances in which a company may be wound up by the court; 433 (e) is applicable if a company is unable to pay its debts while 433 (f) is invoked if the court is of the opinion that it is just and equitable that the company be wound up.
KF Aero, a leasing firm, bought three aircraft from GIE Avions De Transport Regional, Blagnac, France in 2006 and agreed to lease it to KFA through three agreements. Under each agreement, loans were made available to KF Aero by BNP which were to be repaid in annual installments along with interest.
The petitioner disbursed $14.10 million, $14.76 million and $14.83 million in three separate loans, drawn in full by KF Aero.
UBHL had given guarantees through three agreements in June 2006 to indemnify the petitioner, on behalf of KFA.
Indian aviation regulator DGCA had cancelled registration of the three aircraft on April 13, 2012. BNP then issued a winding up notice on July 5, 2012, to which UBHL apparently failed to respond. In its petition, BNP Paribas has sought the court’s direction to wind up UBHL and to appoint a provisional liquidator to take charge of UBHL’s assets.
UBHL is likely to respond to the petition on Wednesday March 27, 2013.
The share price of UBHL plunged to its 52-week low on Tuesday on the BSE and closed at Rs 37.95, down 4.89 per cent from its previous close.