SpiceJet, the cash-strapped low-cost airline, is currently embroiled in a legal battle with Credit Suisse, a Swiss multinational bank. The dispute revolves around the monthly payments SpiceJet is obligated to make to Credit Suisse as part of a court-mandated settlement plan.
Payment Dispute Escalates
Previously, SpiceJet had been making monthly payments of $500,000 to Credit Suisse as part of their agreement. However, the bank sought an increase in these payments, insisting on $1.5 million per month instead. This significant discrepancy in payment amounts led to a legal showdown between the airline and the financial institution.
Supreme Court’s Involvement
The situation escalated to the point where the Supreme Court of India had to intervene. In August, the apex court issued a contempt notice to Ajay Singh, the CEO of SpiceJet, following a plea filed by Credit Suisse. The bank accused SpiceJet of backtracking from the court-mandated settlement plan regarding the payment of outstanding dues.
Origin of the Dispute
The root cause of this dispute can be traced back to an agreement made in May of the previous year. At that time, SpiceJet and Credit Suisse entered into an arrangement aimed at resolving a payment dispute concerning the airline’s failure to meet its financial obligations. Specifically, SpiceJet owed approximately $20 million to SR Technics, a Swiss aircraft maintenance company.
As the legal battle continues, SpiceJet faces both financial and reputational challenges. The outcome of this dispute will undoubtedly have significant implications for the airline’s future operations and its relationship with Credit Suisse.
