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SpiceJet may have to enter liquidation to pay off Swiss debt

The aviation sector in India might see another airline casualty by the end of this year as SpiceJet has been asked by the Madras High Court in India to wind…

The post SpiceJet may have to enter liquidation to pay off Swiss debt appeared first on AeroNewsX.

SpiceJet may have to enter liquidation to pay off Swiss debt

The aviation sector in India might see another airline casualty by the end of this year as SpiceJet has been asked by the Madras High Court in India to wind up commercial operations for unpaid debts and may have to enter liquidation.

Similar to the county’s national carrier Air India, SpiceJet has its own set of financial woes that have been haunting the airline for many years. The balance sheet of the airline has been in a disastrous state for many years with the pandemic only adding to the airline’s financial troubles. Earlier this week on December 6th, the airline was instructed by a single judge bench of Madras High Court to wind up the business due to unpaid dues to creditors.

The petition was filed by the investment bank, Credit Suisse AG, from Zurich, Switzerland, claiming non-payment of USD$24 million. A stay was put on the court order by the High Court for a period of three weeks; allowing SpiceJet a chance to continue operating flights in India.

However, SpiceJet is expected to deposit around USD$5 million within the next two weeks. Failure to abide by the court order will lead to the immediate liquidation of the low-cost carrier by a court-appointed liquidator. The official liquidator in the meantime has been instructed to seize all of SpiceJet’s assets.

The Swiss bank has been appointed as an alleged assignee to SR Technics to represent their firm in their dispute against the Indian airline. SR Technics was hired by the airline back in 2012 to conduct engine overhauls, maintenance and repairs on the aircraft and storage of components.

The company was hired on a 10-year contract, with SpiceJet receiving seven bills of exchanges by the Swiss company over the course of those 10 years. Despite receiving multiple requests to clear these bills, SpiceJet has yet to make a single payment to the company. With the low-cost carrier failing to pay up, a statutory notice to the airline was issued, the company and the bank then filed a suit to liquidate the company as the airline is in no financial state to meet its dues.

SpiceJet argued certain contentions in court trying to relieve themselves of all obligations, however, the company’s arguments were dismissed by the court. The airline is expected to pay the sum within two weeks, while the future of the airline hangs in the balance.

Source: https://aeronewsx.com/spicejet-may-have-to-enter-liquidation-to-pay-off-swiss-debt/

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