Vijay Mallya has been declared bankrupt

Vijay Mallya, the fugitive former head of India’s United Breweries and United Spirits, is bankrupt.

The 65-year-old, who lost his final court battle against extradition to India in May 2020, was formally declared bankrupt in the London High Court yesterday. The ruling has immediate effect.

Mallya is required to hand over his remaining assets, as well as his bank and credit cards to a bankruptcy trustee who will investigate his affairs and establish his true assets and liabilities, with a view to selling assets and repaying creditors. They include both United Spirits and Diageo, its parent company.

Legally he must cooperate with the trustee. All his bank accounts will be frozen, apart from money to buy essentials. He is banned from acting as a director of a company or creating a company without the court’s permission or borrowing more than £500 without declaring he is bankrupt.

Mallya is awaiting extradition from the UK to India to face charges of fraud and money laundering. He has exhausted all avenues of appeal in the UK courts but will not be sent back until a “confidential legal matter” is resolved. This is widely believed to be an application for asylum in Britain.

“There is no evidence he will go back to India to face trial so I find insufficient evidence he will pay the debt in full in a reasonable period of time. I shall adjudicate Dr Mallya bankrupt,” chief Insolvency and Companies Court (ICC) Judge Briggs said.

Mallya says India’s legal authorities have already seized assets worth more than £1.4 billion to repay loans to a consortium of banks from which he borrowed £1.05 billion to bolster his Kingfisher Airways. That failed spectacularly in 2012 after never making a profit. He says the debt is more like £600m and that he has offered settlement on several occasions.

It was those banks who brought the bankruptcy action in London. The bankruptcy has implications for all Mallya’s creditors, including United Spirits and its parent company Diageo. Separately they are suing Mallya for some £250 million for breach of agreements and diversion of funds when he ran USL. A London court has already awarded Diageo some £130m.

Later this week Mallya faces being deposed as life chairman of United Breweries by Heineken, which has taken majority control of the company after buying some of the shares seized from Mallya by the Indian courts. It needs a 75% vote in favour at the company’s annual meeting. Heienken has more than 60% of the votes and observers predict the result will be a formality

Meanwhile, Mallya continues to live on a luxury estate at Tewin in Hertfordshire and in a multi- million pound mansion in Regents Park, London.