Court Halts Winding-Up Case Against SriLankan Airlines
Sri Lanka’s Commercial High Court has temporarily stayed a winding-up petition filed against SriLankan Airlines over a bond default. The petition was brought by Law Debenture Trust (Asia) Ltd., representing DB Trustees (Hong Kong), over a USD175 million bond guaranteed by the Sri Lankan government.
On July 2, Judge Amali Ranaweera issued a two-week enjoining order, adjourning the case for further hearing. The court will next determine whether to extend the stay or allow the petition to proceed.
Law Debenture Trust (Asia) claims the national carrier defaulted on the bond in June 2024. A payment demand was sent on June 11 seeking the principal and USD34.3 million in unpaid interest due in 2023 and 2024, totaling USD209.3 million. The firm warned that failure to settle within 21 days would render the airline insolvent and justify a winding-up order.
In response, SriLankan Airlines argued that neither Law Debenture Trust (Asia) nor DB Trustees (Hong Kong) had legal standing to file the petition, as they are not direct creditors. The state attorney also highlighted that the bonds were government-guaranteed and that the airline is undergoing a restructuring process, making such legal action premature and inappropriate.
The outcome of this case is critical as the financially troubled airline continues efforts to recover under state-led reforms. The court’s upcoming decision could determine whether the petition advances or remains on hold during the restructuring period.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com