Thirteen Indian banks move step closer to recouping £1bn from former F1 boss Vijay Mallya

Bankruptcy hearing set for July in London's High Court

Vijay Mallya on the grid before the Formula One Grand Prix of Great Britain at Silverstone on July 8, 2018. (Photo by Mark Thompson/Getty Images)

Thirteen banks, led by the State Bank of India, moved a step closer to securing a bankruptcy declaration against former F1 boss Vijay Mallya.

London’s High Court upheld an application to amend their bankruptcy petition in favour of waiving their security over the businessman’s assets in India, enabling them to discharge the funds to creditors.

Mr Mallya, 65, is accused of defaulting on loans worth £1.3 billion ($1.8bn) for his Kingfisher Airlines, which was forced to shut in 2012.

The financial institutions are pursuing him over debts and he faces extradition to India on accusations of money laundering and fraud.

On Tuesday, the court ruled the banks can release their security on his assets in the event of a bankruptcy order.

"The petitioners having the right to enforce any security held are willing, in the event of a bankruptcy order being made, to give up any such security for the benefit of all the bankrupt's creditors," Judge Briggs said.

The banks currently have £230 million secured on some of Mr Mallya's assets in India.

A bankruptcy hearing is expected to be held in July.

The court heard Mr Mallya had been a successful businessman, whose aviation company Kingfisher Airways once held 25 per cent of the Indian market, but rising fuel costs in 2008 and the decline of the rupee against the dollar led to financial difficulties.

The court previously heard that the former Formula One boss, the self-styled "King of Good Times", was one of India's wealthiest men and was described by a British judge as a "glamorous, flashy, famous, bejewelled, bodyguarded, ostensibly billionaire playboy".

Mr Mallya set up Kingfisher in 2005, but fled to the UK in 2016 after being accused of misusing loans for the ailing business that was hit hard by the 2008 financial crash.

Money from the loans was pumped into a vanity project, his F1 racing team Force India, and a corporate jet, according to court documents.

He denied wrongdoing and blamed the global financial crisis for the collapse of his business empire.