Meanwhile, lenders have slapped a loan-recall notice on the airline, which will be followed by steps to sale assets.
The lenders, led by the State Bank of India, sold 730,000 USL shares over the past two weeks. The average sell price of USL shares for transactions on April 2 was Rs 1,856 a share. The core committee of the lenders had set a floor price of Rs 1,850. Shares closed 1.5 per cent down at Rs 1,859 on BSE.
The lenders also sold all the pledged stock of Mangalore Chemicals.
Pleading for relief, UB Holdings had sought three weeks' stay on sale of pledged shares by the airline's lenders. The continuous sale would push prices down harming interests, it claimed. It offered to arrange for buyer for these shares. In the meantime, if the price falls more than Rs 100 a share, UB Holding will pay for this loss that the lenders may incur, said UB's counsel.
Lenders, however, insisted that UB Holdings provide tangible liquid and unencumbered security of Rs 500 crore. The security could be in the form of bank guarantees, the said.
Senior public sector bank officials said that their first priority was to sell the pledged shares, a relatively quick and easy route to get part of the outstanding money.
Now lenders are proceeding with other steps including recall notice. After giving notice and due time for response, banks may drag the UB group entities to the Debt Recovery Tribunal. Action would also begin under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
After giving a long rope for repayments, Kingfisher's lenders in February 2013 finally decided to recall all loans, amounting to Rs 7,500 crore.
A loan-recall means the borrower has to repay loans immediately. The recovery, through steps like sale of pledged assets and invoking promoter Mallya's personal guarantees, was going to be a long-drawn one, said a public sector bank executive. Mallya has pledged his villa in Goa as well as airlines headquarters in Mumbai with lenders.
Most of the lenders have treated the Kingfisher Airlines account as non-performing asset from the third quarter of FY12. The lenders had to bear the burden of heavy provisioning, making a dent into the bottom line.
The airline has been grounded since October 2012. Its management had maintained it would resume operations by the summer. Its permit to operate flights also remains suspended. The Director General of Civil Aviation has cleared the summer schedule of all airlines expect Kingfisher's.