AAI may encash SpiceJet’s bank guarantees ahead of court decision on Credit Suisse matter

Forum Gandhi | | Updated on: Jan 27, 2022

FILE PHOTO: A SpiceJet Boeing 737-800 passenger plane moves on the runway at the Sardar Vallabhbhai Patel international airport in the western Indian city of Ahmedabad January 8, 2014. REUTERS/Amit Dave (INDIA - Tags: TRANSPORT BUSINESS)/File Photo | Photo Credit: AMIT DAVE

SC gave multiple deadlines to the airline to repay dues in tranches, but the latter failed to do so

The Airports Authority of India (AAI) is likely to invoke the bank guarantees of SpiceJet to recover over ₹120 crore dues to cushion itsef against any adverse ruling by the Supreme Court in the liquidation matter initiated by Credit Suisse.

According to sources, meetings with the top management of the AAI was held on Thursday. “The management was of the idea that in case SpiceJet’s appeal in the Credit Suisse matter was rejected, the AAI’s dues would be stuck.”

The backstory

In 2019, the AAI had put SpiceJet on cash-and-carry for unpaid dues. SpiceJet had later dragged the Airports Authority to the court in order to prohibit it from encashing it’s guarantees citing cash-crunch.

The court had given multiple deadlines to the company to repay its dues in tranches. However, on several occasions, SpiceJet had failed to do so.

A company spokesperson said they have not received any intimation for invoking bank guarantees. “SpiceJet has been regularly paying its dues as per agreed timelines and all our outstanding are well within the credit limits.”

Another source said an email was sent to the banks for a possible invocation of the bank guarantees, however, BusinessLine wasn’t able to get immediate confirmation on the same. 

‘Going concern’

Recently, the Madras High Court had passed an order in favour of Credit Suisse, allowing liquidation of SpiceJet’s assets to recover dues to the tune of ₹180 crore. 

Earlier this week, the airline moved the Supreme Court, challenging the High Court’s order of directing winding up proceedings. The company is challenging unpaid dues claimed by the Swiss financial services company, Credit Suisse.

BusinessLine had recently reported that auditors have cast a doubt on the ability of debt-laden SpiceJet, to remain a going concern as its net worth has eroded. In the annual report for FY21, the independent auditors pointed out that SpiceJet has defaulted on tax payments, GST payments and employee provident fund dues in FY21 totalling to ₹90 crore.

Published on January 27, 2022
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