Fear of litigation keeps buyers away from Mallya’s properties

Lenders to Vijay Mallya’s Kingfisher Airlines Ltd. are stuck with his properties that they-’ve attached with potential buyers not bidding for them fearing further litigation by the fugitive former liquor baron and between banks claiming the assets, two people with knowledge of the matter said.

“This is a high-profile case where multiple parties are staking claim to the same asset and if the matter enters litigation, then it’s possible it will be a prolonged battle, hence potential buyers are shying away,” an official from a public-sector bank said. “Despite clear property titles, buyers don’t want future litigation.”

Prospective buyers are uncertain about any claims to the properties, which include real estate, bungalows and expensive cars. Some banks have declared Mallya a wilful defaulter. Auctions of the properties have failed even after lowering the reserve price.

In March, the fourth attempt to sell the multi-storied Kingfisher House in Mumbai drew a blank with a reserve price of Rs 103.5 crore, about 10% lower than the previous floor price of Rs 115 crore in December. Buyers stayed away from bidding for Kingfisher Villa in Goa after the reserve price was lowered by 10% to Rs 73 crore.

Kingfisher Airlines owes about Rs 9,000 crore to a consortium of 17 banks led by the State Bank of India.

Mallya, who is one of the guarantors to the loans, left the country in March last year after agreeing to step down from United Spirits Ltd., controlled by Diageo.

Mallya is said to be in Britain, having defied several court orders to return to India. The attached properties were put up for auction by SBICAP Trustee Company Ltd. on behalf of the lenders.

Mallya did not reply to an emailed questionnaire. An official close to Mallya said the banks could have received their money by sitting across the table with him. “Instead, the government is now spending more money to get him,” the aide said.

“A civil offence is being made out to be a criminal offence and he is being hounded when there are as many and more debtors in the country owing money to the banks.”

Some bankers said it’s possible that bidders expect the reserve price to decline further. “We have received several enquiries, including from hospitality companies, but no bids have come, which means that most are waiting for cheaper prices in a weaker commercial real estate market,” said another banker involved with the matter.

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