SpiceJet settles $24 million financial dispute with Credit Suisse

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Low-cost carrier SpiceJet on Thursday said that it has arrived at an ‘in-principle commercial settlement’ with Credit Suisse in the $24-million dispute between the two parties.

“With regard to the dispute pending between Credit Suisse and SpiceJet, we would like to inform that the parties have now reached an in-principle commercial settlement of the dispute and the process of documentation is underway. The settlement with Credit Suisse follows SpiceJet’s successful settlements with De Havilland Aircraft of Canada (DHC), Boeing, aircraft lessors CDB Aviation and Avolon,” a SpiceJet spokesperson said.

The Swiss company had filed a winding up case against the airline for failing to honour some invoices raised for over $24 million towards payment of maintenance, repairing, and overhauling of the aircraft engines and components in 2013. The Madras high court had ordered winding up of SpiceJet and directed its official liquidator to take over the assets of the airline. However, the apex court, on Spiceject’s appeal, had put the HC order on hold and asked the airline to settle the case with Credit Suisse.

“SpiceJet had already deposited $5million on the direction of the HC in the Credit Suisse case and there is no adverse financial liability on the company. The settlement involves payment of settlement amount over a mutually agreed period of time,” SpiceJet said.

SpiceJet senior counsel Mukul Rohatgi had informed about the settlement to the Supreme Court while making his submissions in a separate 2015 case of share transfer with Kalanithi Maran and his company KAL Airways. Earlier in February, Maran had turned down the one-time settlement offer of `600 crore made by SpiceJet as part of ending all its pending disputes, including the share transfer issue between the two parties.

Rohatgi on Thursday reiterated the offer to pay Rs 300 crore more in addition to Rs 308 crore and also said that out of the bank guarantee of Rs 270 crore deposited with the Delhi high court, the company will give Rs 100 crore towards a full and final settlement of the dispute.

Out of the principal amount of Rs 579 crore, Ajay Singh and SpiceJet have paid Rs 308 crore in cash and balance Rs 270 crore have been secured through bank guarantee.

While countering claims made by senior counsel Dushyanat Dave, appearing for Maran, that under its current management a good brand like SpiceJet is facing winding up and Maran is not going to get anything from the airline, Rohatgi said that the airline was emerging from Covid-19 induced stress and had suffered a loss of Rs 10,000 crore during these two years, but it is serious about resolving disputes and avoiding prolonged litigation.

Dave said that Ajay Singh and his airline owes total dues of Rs 920 crore to Maran and his firm and also asked them to pay additional interest on the delay.

A bench, headed by Chief Justice N V Ramana, while asking the lawyers for SpiceJet and Maran to talk to their clients and persuade them for a settlement told Rohatgi to pay extra interest.

“SpiceJet wants to settle. Their proposal is that SpiceJet has already paid Rs 308 crore in cash and deposited a bank guarantee of Rs 270 crore, they are willing to release another Rs 100 crore, subject to Maran’s wish. The other option is that we hear the matter…We will suggest you discuss the settlement and come back,” the CJI said, while posting the matter for further hearing on April 12.

The case relates to a dispute arising out of non-issuance of warrants in favour of Maran, after transfer of ownership to Singh, the controlling shareholder of SpiceJet. The dispute started after Singh took back control of the airline in February 2015 amidst financial crisis. Maran and his KAL Airways had transferred their entire 350.4 million equity shares in SpiceJet, amounting to a 58.46% stake in the airline, to its co-founder Ajay Singh in February 2015 for just Rs 2. The airline’s total debt at the time of acquisition was over Rs 1,400 crore. The carrier was forced to shut operations for a day in December 2014 due to a severe cash crunch.