Spicejet Case
Lessors reject Ajay Singh's share pledge offer to offset SpiceJet liability
This story was originally published at 21:20 IST on 12 August 2024
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NEW DELHI – SpiceJet Ltd's engine lessors--Team France 01 SAS and Sunbird France 02 SAS--today rejected the airline's Chairman and Managing Director Ajay Singh's offer to pledge his personal shares to them equivalent to the airline’s outstanding amount to discharge the liability. The lessors said that they don't want "pledge of shares of a company whose existence is shaky" and hence it is not acceptable.
The lessors' counsel said that it sought disclosure of Singh's assets. "We are giving 15 days to the airline to ground our three engines and make its own arrangement and return our engines," said the counsel. The court will now hear the case next on Aug 14. The parties will have to give a chart on how much outstanding payments are there, and which amount was due on which date.
On Aug 8, the court had asked SpiceJet if it were willing to submit a personal undertaking from the directors that if the airline was unable to pay the remaining amount to its engine lessors, they would pay the money from their pockets. The court had also asked the lessors to reply if they would accept the directors' undertaking or continue to seek grounding of engines for non-payment of dues.
On May 29, the high court had asked SpiceJet to pay $4.8 mln to the engine lessors as an interim arrangement to continue using their three leased engines. SpiceJet will pay the amount in four instalments to the lessors, the court had said.
In addition, the airline would make weekly payments of $160,000 to the lessors from Jun 8 to Sep 30. If the airline misses any payment, it will be liable to ground its three engines and return these within 15 calendar days, the court had said. After this payment, the parties will discuss the remaining plan of payment related to the outstanding $3.6 mln, it had said. The above interim arrangement will remain in place, and subject to its compliance, the airline will continue to use the engines, said the court.
In December, the lessors had filed two suits seeking a decree of permanent injunction restraining SpiceJet and its directors and employees from utilising the said engines any further. The lessors had also sought directions from the court to SpiceJet to hand over these engines to them and compensate them for the cost associated with their re-possession and also pay them the outstanding lease charges.
On Jul 31, the lessors said SpiceJet had failed to comply with the statements given to the court. It sought an injunction against the airline from operating the engines. SpiceJet accepted the default and said that the payment would be made till Aug 8. However, the airline did not make the payment.
Today, shares of SpiceJet closed 4.7% higher at 61.80 rupees on the BSE. End
Reported by Surya Tripathi
Edited by Deepshikha Bhardwaj
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