'No more extensions, SpiceJet must pay Credit Suisse'

The apex court questioned SpiceJet chairman and managing director Ajay Singh's capacity to finance the acquisition while neglecting SpiceJet's overdue payments, cautioning that further delays would not be tolerated.  (REUTERS)
The apex court questioned SpiceJet chairman and managing director Ajay Singh's capacity to finance the acquisition while neglecting SpiceJet's overdue payments, cautioning that further delays would not be tolerated. (REUTERS)

Summary

  • Supreme Court orders SpiceJet to pay $1.25 million to Credit Suisse by 15 March. Chairman Ajay Singh summoned post payment. Court raises concerns over financing Go First bid amid overdue payments, warns against delays.

The Supreme Court on Monday slammed SpiceJet for failing to clear its dues to Credit Suisse, ordering the low-cost airline to pay up by 15 March and asking its chairman Ajay Singh to appear before it a week after making the payment.

The apex court took critical note of reports indicating that SpiceJet, in collaboration with Busy Bee Aviation Pvt. Ltd, had submitted a bid to acquire bankrupt airline Go First.

The court questioned Singh’s capacity to finance the acquisition while neglecting SpiceJet’s overdue payments, cautioning that further delays would not be tolerated.

The court directed SpiceJet to pay $1.25 million to Credit Suisse, a Zürich-headquartered global investment bank and financial services firm. This came after Credit Suisse informed the Supreme Court that it was to receive $15 million from SpiceJet by 15 February, but had received only $13.75 million.

In March last year, Credit Suisse had filed a petition to initiate contempt proceedings against SpiceJet and Singh, alleging intentional non-compliance with court directives and failure to settle outstanding dues.

The court issued a notice to SpiceJet in August in the case, but allowed it time until September to initiate payments of $1 million per month for six months to Credit Suisse towards meeting its dues, followed by monthly payments of $500,000.

Despite grappling with financial challenges and pending payments to various creditors, SpiceJet was in the news recently after Singh’s joint bid with Busy Bee Aviation to acquire Go First.

According to people familiar with his plans, Singh sees potential in the land assets of Go First, estimated to be worth around 10,000 crore, and an expected compensation from engine manufacturer Pratt & Whitney for faulty engines.

The legal dispute with Credit Suisse traces back to November 2011 when SpiceJet, then under the ownership of Kalanithi Maran, entered into a 10-year aircraft servicing agreement with SR Technics, a Swiss company providing maintenance, repair and overhaul services for aircraft.

The Swiss firm had issued invoices based on work done, while SpiceJet issued seven bills of exchange to cover the amount.

In September 2012, SR Technics formally handed over all rights to receive payments under the SpiceJet deal to Credit Suisse.

However, the airline failed to make payments and ran up dues of over $24 million, prompting Credit Suisse to file a winding-up petition against SpiceJet in 2021. (Ajay Singh took back ownership of the airline from Maran in 2015.)

In January 2022, the Madras high court turned down an appeal by SpiceJet against a December 2021 order by a single-judge bench to wind up its operations after the airline failed to pay up the $24 million it owed.

When the matter moved to the Supreme Court, the apex court stayed a Madras high court order directing the winding-up of SpiceJet, and gave the airline some time to resolve its dispute with Credit Suisse AG. That process is yet to come to closure.

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