Economy

SpiceJet challenges Madras HC order on liquidation

Forum Gandhi | | Updated on: Jan 06, 2022
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Airline argues that the order is ‘erroneous and against the weight of evidence’

SpiceJet has challenged the Madras High Court single bench’s order on liquidating its assets. The airline has argued that the order was erroneous and against the weight of evidence.

Last month, the Madras High Court had directed the winding up of SpiceJet for non-payment of $24 million to Zurich-based stock corporation Credit Suisse AG. The court directed the official liquidator to take over the carrier’s assets. However, after pronouncing the order, the judge stayed it for three weeks, subject to the condition that the company deposits $5 million within two weeks. SpiceJet had obtained an extension until January 3 to submit a bank guarantee instead of the amount.

According to sources, SpiceJet got the approval for the guarantee from Yes Bank at the last minute, and it was submitted late evening on January 3. Subsequently, the airline filed an appeal with the division bench of Justice Paresh Upadhyay and Sathi Kumar Sukumara Kurup.

Auditors cast doubts over SpiceJet’s ability to continue as a going concern

The matter was due for hearing on Tuesday but since the counsels for Credit Suisse had not received the documents the bench decided to hear the respondent’s argument on Wednesday.

SpiceJet submitted a 350-page appeal to Madras High Court. A copy of the appeal was reviewed by BusinessLine . SpiceJet has mentioned six ‘grounds of appeal’. It stated, “The order of the learned judge is erroneous in law and against the weight of evidence, facts, and possibilities of the case.”

Aviation sector continues to face challenges as it goes in 2022

It said that the single judge bench “while appointing a provisional liquidator failed to see a miscarriage of justice as the Appellant is a going concern and the appointment of a provisional liquidator will have disastrous consequences for all of the Appellant’s stakeholders including more than 12,000 employees and will have massive ramifications in the aviation industry which is still recovering from the effects of COVID-19”.

BusinessLine had reported that SpiceJet is facing a cash crunch and ilitigations from statutory authorities, employees and aircraft manufacturers, among others. Its auditors too have questioned its ability to continue as a going concern.

Published on January 06, 2022

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