India’s NCLAT Temporarily Halts Insolvency Proceedings Against Deccan Charters
India’s National Company Law Appellate Tribunal (NCLAT) has temporarily suspended insolvency proceedings against Deccan Charters, pending a further review set for April 26. The decision came after Deccan Charters appealed against the initiation of a Corporate Insolvency Resolution Process (CIRP) by the Bengaluru bench of the National Company Law Tribunal (NCLT).
The NCLT had previously ordered the insolvency process based on a petition from Krone Finstock, a financial creditor, alleging a default of approximately INR 100 million (USD 1.1 million). However, Deccan Charters contested this claim, leading to the current halt in proceedings.
According to reports from The New Indian Express, the NCLAT has directed Krone Finstock to respond within four days to the arguments presented by Deccan Charters. This response will likely influence the tribunal’s decision in the upcoming hearing.
Court documents reveal that in 2018, Deccan Charters took a loan of INR 50 million (USD 598,000) from Krone Finstock to establish a joint venture with GSEC Monarch & Deccan Aviation Pvt Ltd. It was agreed that the joint venture would assume liability for the loan repayment, a commitment that has since become a central issue in the dispute.
Additional reports by The New Indian Express indicate that Deccan Charters received another loan of INR 62.1 million (USD 742,800) from Krone Finstock in the same year. Some of this amount was repaid and adjusted against accrued interest, but the remaining debt led to Krone Finstock initiating the insolvency proceedings after Deccan Charters failed to settle the full amount.
Established in 1997, Deccan Charters is a Bengaluru-based aviation company offering a range of services, including charter flights, helicopter services, aircraft management, and maintenance, repair, and overhaul (MRO) operations. The outcome of the April 26 hearing could have significant implications for the company’s future operations and financial health.