KOCHI: First time in the history of Indian banking industry, Kerala-based Federal Bank has invoked the provisions of the Insolvency code 2016 to take over the possession of a ‘seaplane’
The state’s largest private bank seized the aircraft following failure of repayment of loan worth Rs.6 crore took by its owner, Seabird Seaplane Ltd.
Babu KA, senior vice president of Federal Bank, who led the recovery procedure, said that they had invoked the provisions of the insolvency code as the Sarfaesi Act does not envisage taking over aircraft.
Seabird Seaplane, which launched its services to Lakshadweep in 2015, defaulted on loans after it fell into bad times. The seaplane parked in Cochin International Airport Limited (CIAL) was taken under custody by Insolvency Professional Jose KK, appointed by the National Company Law Tribunal (NCLT). Officials said a new amphibious aircraft has a market rate of Rs 13 crore.
However, the Seabird Seaplane is valued at about Rs 8 crore. Though some parties had come forward to buy the aircraft between Rs.8 and Rs.9 crores, the company was refusing to sell it and clear its dues.
This is not the first time that the Kerala-based bank is taking over properties of companies that default on the loans but the bank has been using the provisions of the Sarfaesi Act (the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002) to take over the commercial properties.
In 2017, Federal Bank, using Sarfaesi Act, had taken over two resorts in Thekkadi - Elephant Court, a 5-star resort, and Peppervine, another resort, after its promoters Vijaya Hospitality and Resorts defaulted on about Rs 36 crore in loans.
Image Credit: New Indian Express