What's at Stake for Vijay Mallya if Kingfisher Fails?

We don't give much value to guarantees: Lenders

Banks have guarantees around $1.2 billion from Mallya’s company, but for most of Mallya’s lenders it would be the last resort.

P. Rudran, CEO of Asset Reconstruction (India), an upset debt investor backed by banks including SBI and ICICI Bank said, "Corporate guarantees and personal guarantees are difficult to enforce. When we do our valuation, we practically don't give much value to guarantees unless it is a government guarantee."

The lenders showed doubts on guarantees saying that invoking guarantees is a long-process taking years to complete. Kingfisher's lenders are mostly state banks, and many frustrated bankers appear resigned to recovering as little as $25-$30 million, at least in the near term.

The “King of Good Times,” Vijay Mallya launched the airlines seven years ago for his flamboyant lifestyle. Though it could never make a profit, it once came at the second position among the air services in India by domestic market shares. In 2011, Kingfisher airlines cancelled thousands of flights. The cash-strapped since then has been waiting for a rule change to allow foreign investments; though none of the foreign investors has publically expressed interest in investing. Now it has been knocked back to sixth due to high debt and fierce competition.

Mallya's UB Group includes Kingfisher, United Breweries, United Spirits Ltd and UB Holdings. Mallya, who also owns a cricket franchise, has given a $50 million personal guarantee. Last year he sold a 42.5 percent stake in his Formula One racing team to India's Sahara group.