Kingfisher employees may not gain from liquidation: Ranina

Also read: Kingfisher Air down 4% after losing slots at Mumbai Airport

Below is the edited transcript of his interview to CNBC-TV18.

Q: Are employees eligible to file a winding up petition under the Companies Act? In this case since they haven't been paid since the month of May last year?

A: Section 439 of the Companies Act empowers creditor to file a petition and employees are creditors of the company. So, they are entitled to file the petition. The employees are not paid salaries so there is a huge liability in the books of Kingfisher as far as the employees are concerned.

Q: Do you see this amounting to much given the current state of affairs at the airline which is now been grounded for several months?

A: The question is; what will the employees get out of filing the petition? Kingfisher does not have any assets. All of their assets have been taken away. If at all there are some assets then banks which have a first charge on those assets because they have given almost Rs 7,500 crore as loan. Therefore, I don't think the employees will really achieve much as far as recovering their salaries by taking Kingfisher to liquidation.

Q: We understand that banks are holding another crucial meeting, the lending consortium is meeting on January 18 to discuss the future course of action. If indeed banks decide that their patience has run out and do decide to move the High Court, what do you think is the likely route going to be for banks to move against the management?

A: The banks should have acted much earlier they have given a very long rope to Kingfisher. If they act now then they will invoke the guarantees that have been given by the promoter group companies, mainly United Breweries and United Spirits , and that is where the money will come from because Kingfisher doesn’t have any tangible assets to liquidate and to distribute.

HP Ranina, senior advocate, Supreme Court, says that the employees are eligible to file a petition for winding up of the company under the Act. However, the chances of employees getting their claim is limited as bank stands a first chance of getting their dues.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Are employees eligible to file a winding up petition under the Companies Act? In this case since they haven’t been paid since the month of May last year?

A: Section 439 of the Companies Act empowers creditor to file a petition and employees are creditors of the company. So, they are entitled to file the petition. The employees are not paid salaries so there is a huge liability in the books of Kingfisher as far as the employees are concerned.

Q: Do you see this amounting to much given the current state of affairs at the airline which is now been grounded for several months?

A: The question is; what will the employees get out of filing the petition? Kingfisher does not have any assets. All of their assets have been taken away. If at all there are some assets then banks which have a first charge on those assets because they have given almost Rs 7500 crore as loan. Therefore, I don’t think the employees will really achieve much as far as recovering their salaries by taking Kingfisher to liquidation.