Tuesday, November 19, 2019

NCLT orders insolvency process at low-cost carrier Air Costa

The bankruptcy court has ordered corporate insolvency resolution process for the grounded South Indian low-cost air carrier, Air Costa, owned by the Vijayawada-based Lingamaneni family’s LEPL Projects.
Air Costa is the second Indian airline, after Jet Airways, to undergo court-monitored debt resolution process under the Insolvency and Bankruptcy Code. Aviation regulator Director General of Civil Aviation had in June 2017 suspended the flying licence of the airline, making it officially wind up operations.
 The Amaravati bench of the National Company Law Tribunal (NCLT) appointed MS Mano Ranjani as the interim resolution professional for the airline, responding to a petition by German aircraft maintenance firm MTU Maintenance Berlin-Brandenburg GmbH (MTUBerlin) as an operational creditor.
The German firm said the low-cost air carrier didn’t make the required payments for the lease of aircraft engines and also defaulted on payments under maintenance agreements. On Monday evening, Air Costa promoter Ramesh Lingamaneni said in a statement that LEPL was solvent with strong fundamentals.
The airline has also accused the German company in the NCLT of supplying defective engines, that too with a delay, causing it losses. It also challenged other claims of the operational creditor. MTU-Berlin said Air Costa had in November 2014 entered into an aircraft engine lease agreement with its associate MTU Maintenance Lease Services, Netherlands. It had entered also into a separate agreement with MTU-Berlin for engine maintenance, repair and overhaul (MRO) services and another MRO pact with MTU Maintenance Canada.
 19/11/19 CR Sukumar/Economic Times
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