25/02/2015 8:24 AM IST | Updated 15/07/2016 8:25 AM IST

Bank Consortium Takes Over Kingfisher House In Mumbai

Kingfisher Airlines jets parked at the Indira Gandhi international airport in New Delhi, India, Tuesday, Oct. 2, 2012. Kingfisher Airlines grounded flights for at least three days after a violent strike over unpaid wages at the cash-strapped Indian carrier. (AP Photo/Tsering Topgyal)

Grounded carrier Kingfisher Airlines, founded by flamboyant liquor baron Vijay Mallya, said on Tuesday it had handed over possession of a property to a group of lenders to which it owes about $1.5 billion.

Kingfisher, once India's second-biggest airline, stopped flying more than two years ago for want of cash, leaving its creditors, mostly state-run banks, and suppliers with pending dues.

The lenders had been trying to take possession of Kingfisher House in Mumbai for nearly two years, but the takeover had been delayed by legal issues. A Mumbai court this month ordered Kingfisher to hand over the property to a group of bankers.

Kingfisher House, once the airline's headquarters, is estimated to be worth about $15 million, a fraction of what the lenders are owed.

Indian stock exchanges in November suspended trading shares of the airline after it failed to comply with rules on reporting financial results. The government in December rejected the re-appointment of Mallya as managing director of Kingfisher.

Banks have also moved to declare Mallya, once known as "The King of Good Times" for his flamboyant lifestyle, a "wilful defaulter", pending court approval.

The tag could mean the tycoon could be forced to stand down from any corporate posts and may also damage the fund-raising prospects of businesses with which he is associated.

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