London, March 12: Vijay Mallya-owned troubled Kingfisher Airlines owes Bank of Scotland $21.6 million in overdue lease payments for 10 ATR 72-500 aircraft, the UK High Court has ruled, paving the way for potential action by the bank to recover the outstanding sum.
According to flightglobal.com, Bank of Scotland had brought the action on behalf of a consortium of lenders against Kingfisher's parent company, United Breweries Holdings, which had guaranteed the airline's obligations.
In his January 13 judgement, Justice Eder said: "I am satisfied that the amounts claimed are due and owing and that therefore in those circumstances the claimants are entitled to summary judgement in the sum claimed, that is USD 21,589,972.56".
He said he saw "no other good reason" why the matter should not proceed to trial.
The judgement paves the way for a potential action in India, or elsewhere, as it enables Bank of Scotland to pursue United Breweries Holdings' assets to recover the outstanding sum, the report said.
Dependent on the location of those assets, interaction with the local jurisdiction may well be required.
Bank of Scotland, as the security trustee for a group of syndicated lenders, funded KF Turbo Leasing, a special purpose vehicle incorporated in the Cayman Islands that purchased the ATR aircraft.
Each aircraft was leased then by KF Turbo leasing, for a term of 10 years beginning on the delivery of that aircraft, to Kingfisher, according to UK documents.
Both parties entered into the agreement on March 29, 2007. The cash-strapped airline is already neck deep in financial woes and has asked for government help to bail it out.