SpiceJet’s bid to shed cargo business runs into turbulence

Our Bureau Mumbai | Updated on September 28, 2021

The matter is now set to be heard on November 29   -  REUTERS

Delhi High Court issues interim injunction against airline from alienating its assets

SpiceJet’s plans to hive off its cargo business has hit a roadblock with the Delhi High Court issuing an interim injunction against the debt-strapped airline preventing it from alienating a part of the assets into a separate company.

The court’s ruling comes after leasing company Goshawk filed a plea for the enforcement of $25.6 million in damages awarded against SpiceJet by a UK court.

SpiceJet had defaulted on dues on two B737 Max along with one another aircraft which it had leased from Goshawk. The leasing company then dragged the airline to a UK court. The UK high court had passed an order in favour of the leasing company in April this year and asked the debt-strapped airline to cough up $25.6 million for the dues.

Enforcement application

To do so, the leasing company along with its parent company moved an enforcement application. The leasing company also sought a stay on the company’s plans to hive off its assets to the tune of $25.6 million into another entity.

A lawyer appearing in the matter requesting anonymity said, “Goshawk’s rationale was that if the assets are moved into another entity, it becomes impossible for them to recover their dues because then they cannot be attached to recover the debts.”

After hearing the matter, the Delhi High Court in its interim order said, “Till further orders, the judgment debtor is restrained from transferring/alienating its assets to the tune of decretal amount.” The matter is now supposed to be heard on November 29.

Goshawk isn’t the only lessor that has moved the Indian court to recover dues from SpiceJet. BusinessLine had reported that De Havilland too had moved the Indian courts to recover $42.9 million in damages awarded against SpiceJet by a UK court.

Sources said that hiving off the cargo business into a subsidiary company was the company’s only opportunity to raise equity since the promotor, Ajay Singh has expressed his inability to infuse more funds.

While the majority of SpiceJet’s shareholders had approved the demerger of the cargo unit, at least 17.2 per cent of its shareholders voted against this plan. The majority of those who voted against are public institutions.

Published on September 27, 2021

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