What happens in the Bahamas… Vijay Mallya saves his signature London home – again – Moneycontrol

(File) Vijay Mallya leaving the High Court.

On 18 January, the high court in Londonhad given Swiss bank UBS the right to take possession of Vijay Mallya's trophy London home which overlooks Regents Park. The possession order for the over 30-bedroom property came in response to the bank's contention that Mallya had failed to repay the mortgage of 20 million pounds that was provided keeping the house as security.

Less than a month after that ruling, a favourable order by the Supreme Court of Bahamas on Friday (11 February 2022) has meant that UBS will get access to enough funds to redeem the mortgage and any associated interest.

The order, of whichthis writer has an exclusive copy, approves the inclusion of Vijay Mallya's mother and children as beneficiaries of the three Balaji Trusts, registered in Bahamas, which have more than enough money to cover the UBS mortgage.

The Balaji One Three-Gift settlement, Balaji Two Three-Gift settlement, Balaji Three Three-Gift settlement, are all trusts which are registered in the Bahamas with Black Stone PTC Limited as the trustee. In order to get the court's approval to use the money to pay UBS, Mallya's children and mother - who lives at the property - were to be shown as beneficiaries.

The development provides a window into the complex tangle of trust funds and tax havens which are used by high net worth individuals. The sum effect of the judgment by the Bahamian court is that Mallya will be able to keep the London property. The development also gives evidence of Mallya's ability to turn around adverse situations. Indian agencies secured victory in the extradition proceedingsin British courts to have him extradited, but despite extinguishing all legal options, Mallya continues to be in the UK by virtue of an asylum application.

While it is correct that Mallya (or rather Rose Capital Ventures which owns the London property on paper) had failed to repay the mortgage, during the proceedings it had emerged that the bank had enough security to cover the mortgage amount. However, as it touched upon the complex structure of trusts registered in Bahamas, it required a separate set of proceedings in the courts for the money to be made available.

Mallya had indicated tothis reporter after the January 18 ruling that UBS holds cash in excess of the mortgage, but a Bahamian court order was required to use cash in the Trust.

This week, honourable Madam Justice Donna Newton of the Supreme Court of Bahamas gave the court's assent to Birchwood Hills Inc, owned by Balaji One Three settlement, to enter into a loan and mortgage agreement with Rose Capital Ventures Limited for the "sole and exclusive purpose of repaying the amounts due to UBS".

This is the second instance when Mallya delicately manoeuvred to prevent UBS from taking over the property. In March 2020, Justice Teare of the high court in London had allowed Rose Capital to enter into a mortgage agreement with another company registered in a tax haven. But while that application was opposed by Indian banks who were pursuing Mallya to be declared bankrupt, it does not seem like they opposed the proceedings in the Bahamian court in a similar fashion. Mallya has now of coursebeen declared bankrupt bythe court, and the State Bank of India did submit a letter to the Bahamian court through its solicitor TLT LLP to secure its interest.

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What happens in the Bahamas... Vijay Mallya saves his signature London home - again - Moneycontrol