The family of Vijay Mallya will be able to hold on to their luxury London home after a UK court ruled that refinancing of a loan by a family trust firm would not be in breach of the worldwide freezing order (WFO), in place against the embattled liquor tycoon.
Rose Capital Ventures (RCV), a British Virgin Islands firm linked to the Mallya family trust which owns the Cornwall Terrace property in central London, had made an application in the London High Court which was heard last Friday.
Judge Simon Rainey QC ruled that the refinancing is a “permissible transaction” as it meant investment in a prime London property.
“The proposed realisations are proper,” the judge noted.
The legal battle by Mr Mallya and co-defendants – his mother Lalitha and son Sidhartha Mallya – to hold on to the Cornwall Terrace apartment overlooking Regent’s Park in London dates back to March 2017 when the five-year term on a loan from Swiss Bank UBS expired. The bank then proceeded to redeem the GBP 2.4 million unpaid amount of the loan, which was taken out by RCV.
At a hearing in 2020, the London court confirmed that RCV re-financing its UBS loan was permitted under the WFO as it was in the ordinary and proper course of RCV’s business. That application, however, did not consider the realisation of investments owned by Mallya trust entities to enable that loan to be made to RCV.
UBS, which also managed the investments that were to be used, refused to allow those realisations because it feared that doing so might be a breach of the WFO. RCV therefore brought an application for confirmation that the realisations were permitted to enable the repayment of the UBS loan.
A second part of their application last week related to the payment of their lawyers’ fees in the matter, which has been adjourned to be determined at a later stage.
Meanwhile, Friday’s hearing also dealt with an application by the “trustees in bankruptcy” to join the WFO proceedings, to allow them access to relevant documents to be able to dispose of any of Mallya’s assets in accordance with their duties under the bankruptcy order from July last year.
The trustees in bankruptcy, entrusted with the task of handling insolvency matters in the UK, have now joined the proceedings as part of their efforts to investigate Mr Mallya’s estate to enable the recovery of assets to repay his various creditors, including the consortium of Indian banks led by State Bank of India (SBI).
The 65-year-old businessman has sought the court’s permission to appeal against the bankruptcy order, which is expected to come up for a hearing later this month.
Separately, Mr Mallya is wanted in India to face fraud and money laundering charges and remains on bail on an extradition warrant while a “confidential” legal process is completed, believed to involve an application seeking political asylum in the UK.
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