India’s SpiceJet heaves a sigh of relief as it has reached an in-principle commercial settlement of the dispute with the Swiss financial services company Credit Suisse AG in the ‘winding up’ case. The case pertains to the plea filed by Credit Suisse in the Madras High Court to wind up SpiceJet alleging the Indian low-cost carrier over outstanding dues worth $24 million.
On Thursday, SpiceJet stated with regard to the dispute pending between the Swiss stock corporation and the airline, informing the in-principle settlement between both parties and undergoing the process of filing consent documents on resolving the dispute.
According to the airline, it had already paid $ 5 million within the timeframe directed by Madras High Court. The current deal requires it to pay the settlement amount over a mutually agreed period, bringing an end to the long-standing clash over unpaid dues.
In December 2021, the Madras High Court had permitted the liquidator to take over assets of Spicejet as the carrier rendered itself liable to wound up for its inability to pay its debt of around $24 million to Credit Suisse. The court had dismissed the appeal of SpiceJet against the winding up the order based on the claim that SR Technics didn’t have a valid license as required under the Aircraft Act. Launching the appeal in Supreme Court in January 2022, SpiceJet was granted the stay order to facilitate the settlement between both parties.
The main reason behind Credit Suisse seeking SpiceJet’s insolvency
The original deal between SpiceJet and SR Technics in Switzerland dates back to 2011 when the airline agreed with the Swiss company worth $415 million for a lifetime of 10 years for carrying out its aircraft maintenance and repair, especially the Boeing 737 fleet and its CFM 56 engines. In 2012, SR Technics entered a financial agreement with Credit Suisse AG entitling rights to the Swiss firm to receive payment from SpiceJet, which the airline shrugged off to repay as per the invoices despite repeated requests. Then in December 2021, the Swiss banking conglomerate sought the winding up of the airline by filing the petition in the Madras High Court after a long standoff over unpaid dues of nearly $24 million.
Share transfer dispute
Besides the ‘winding up’ case filed by Credit Suisse AG, SpiceJet has been involved in a share transfer dispute against Kalanithi Maran, the former SpiceJet promoter. The court has deferred the hearing of the case for April 12, ordering both parties to consider reaching an agreement in the share transfer case, which rose in 2015. The cash-strapped SpiceJet informed the Supreme Court that it was trying to collect funds despite the dire economic situation inflicted by the COVID-19 pandemic and made a reasonable offer for the settlement, which Maran didn’t agree with. Maran, however, claimed that the carrier wasn’t paying both principal and interest amounts worth Rs. 600 crores and Rs. 300 crores respectively.
Meanwhile, there has been news that City Union Bank (CUB) has made the decision to recall the loan of Rs 100 crore bank overdraft SpiceJet had taken in 2014-15.