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It was said in a jocular vein. "You're on the ventilator now. But the plug can't be pulled because euthanasia is still illegal in the country." The nervousness was palpable and titters followed the comment on a conference call that included Vijay Mallya and his most trusted aides. They were trying to figure a way out of the Rs 10,000 crore mess Kingfisher Airlines has accumulated in debts and unpaid bills over the years. Mallya, the chairman of the UB Group, laughed as well.

If there was any panic, it wasn’t evident in his voice. But those who've seen him from close quarters say he’s mellowed over the last one year. And that the man is fatigued because his back has been up against the wall for a long time now. It's another matter altogether that he has no sympathy or sympathisers—all thanks to his "schizophrenic behaviour" as another aide puts it.

In mid-May this year, Mallya requisitioned staff from Kingfisher Airlines to go to Monaco to help with his 'opening of the season' party on his yacht moored at Monte Carlo. His party, now an annual tradition, was attended by the likes of Antonio Banderas and Formula One boss Bernie Ecclestone. The air hostesses kept their smiles on, as they saw their boss burn a few crores on a single night of high-jinks. They hadn’t been paid their salaries for the last four months.

But Vijay Mallya has it sorted out in his head. What he does in his personal life is nobody’s business. What he does in his professional dealings is all that ought to matter. His people though want him to read the writing on the wall. That his professional dealings aren't the kind of stuff legends will be written about. Because if things continue the way they are, his son Siddhartha, for whom Vijay Mallya had created Kingfisher Airlines as a coming-of-age gift on his 18th birthday, will have no empire left to inherit.

In fact, they reminded him that it was just a few weeks ago, on June 21, that Hitesh Patel, executive vice president at Kingfisher Airlines, was at Lloyd’s of London, a 300-year-old insurance market run by hard-nosed brokers. Once upon a time, Lloyd’s used to insure ships in the slave trade. Now, they cover high-value assets like aircraft, space ships and oil rigs and they know a thing or two about pricing risk.

Patel’s plans to recapitalise Kingfisher sounded desperate. He knew that no airline can take off without an insurance cover. Which is why, even though the airline had defaulted on paying salaries, suppliers, fees to airport companies across the world and leasers from whom the airline had rented planes, it hadn’t on paying insurance premiums.

But as Patel went about his pitch, it was obvious to him the looks on the faces of the brokers were sceptical. How, they asked him, did Kingfisher plan to pay future premiums? Patel argued, over the next couple of months, the airline will prune its fleet to 35-odd. They raised their brows when he said Kingfisher has two investors lined up—the first a financial investor; the second a strategic one. The airline was keen to go with the strategic partner, he said. And, he added, he expects the Indian government to ease its policies on foreign direct investment (FDI). That move, he told the audience, would give the airline a lifeline.

But as I write this story on July 2, things don’t look sanguine. While the folks at Lloyd’s, who’ve heard many tall tales during their careers, may come around to insuring Mallya’s fleet at a higher premium, his lenders may not be as kind. On July 5, before this copy reaches you, Mallya and team are scheduled to meet up with a committee of bankers at the State Bank of India’s (SBI) headquarters in Mumbai. They need to know how he plans to repay what he owes them.

When this committee met during the last quarter, representatives from SBI had asked Mallya to infuse fresh equity into the business, as this would signal his intent to get out of the mess.

But Mallya, aided by Ravi Nedungadi, his trusted lieutenant and the group’s chief financial officer (CFO), argued his way out using the FDI card. While the bankers said it was a “long shot”, they still decided to give him the benefit of doubt. Since then though, nothing has moved and the lenders are getting impatient. What they see is a man clinging to a disintegrating airline and destined to preside over the biggest bankruptcy in Indian business history.

On their part, the bankers are grappling with an animal of a kind they haven’t dealt with before. When they had to recover their monies from companies like Ispat, Essar Oil, or more recently Hindustan Construction Company (HCC), they lent against collateral in the form of the assets, and they could use that to arm-twist the promoters into paying up.

In Mallya’s case, what they have are intangibles—like the Kingfisher brand for instance. But this is uncharted territory for banks. There are not too many examples of making the most from brands that have been pledged—other than the occasional example like BPL. Then there is Mallya’s stake in his flagship United Breweries (UBL) and United Spirits (USL) that he had pledged as collateral. Even if these were put out in the open market, at current market prices, they would get just about Rs 150-200 crore. Add to all of this his personal assets like his many homes in various parts of the world. Tot up the net worth of all of this and it doesn’t add to the Rs 7,000 crore-odd the consortium would like to see back on their books.

Perhaps that explains why Mallya and Nedungadi always seem unflappable at these meetings. They don’t plead for time, nor do they sound desperate in their dealings. This, again, is nothing like what the battle-hardened bankers have seen in the past where promoters have practically gone down on their knees to protect their assets from liquidation.

That also explains why the consortium of lenders led by SBI and including Punjab National Bank, Central Bank of India and ICICI Bank has banded together, put the debts into a pool, and tried to figure the most viable way to get their money back.

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