Mallya banned from US$75m USL payoff

Vijay Mallya has been temporarily banned from receiving a US$75 million severance package from Diageo as 17 banks attempt to recover substantial loans issued to the former USL chairman.

Vijay Mallya cannot access his US$75m payoff from Diageo, India’s Debt Recovery Tribunal has ruled

Today (7 March) India’s Debt Recovery Tribunal issued the order following an interim application from a consortium of 17 banks, led by the State Bank of India.

The banks are attempting recover loans given to Mallya, primarily for his grounded Kingfisher Airlines.

Last week, Mallya resigned from his position as chairman and non-executive director of India’s largest drinks group, United Spirits, after parent company Diageo agreed to pay the tycoon US$75m.

The UK group said it would pay Mallya US$40m immediately and the remaining balance in equal installments over five years as part of a “global non-compete, non-interference and standstill arrangement”.

Under the deal, Diageo said Mallya will be “released” from his “personal obligation” to repay a US$135m loan guaranteed by the group.

Last week, the State Bank of India confirmed that it was seeking an arrest warrant against Mallya and asked for his passport to be seized and all assets declared. However, the Debt Recovery Tribunal has not yet issued an order adhering to the request.

Now, local press reports state that Diageo and United Spirits have been ordered not to release the funds to Mallya until the debt recovery case is settled.

Separately, India’s Enforcement Directorate has named Mallya as part of money laundering case against Kingfisher Airlines following a probe by the Central Bureau Investigation.

At the time his deal with Diageo was announced, Mallya said he intended to “spend more time in England” to be closer to his children.