Friday, December 2, 2022

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With bankruptcy proceedings initiated, India has increased its attractiveness

India’s regional airline Zoom Air (officially Zexus Air Services) has had a tumultuous journey so far. Founded in April 2013 by Surender Kumar Kaushik, Zexus Air received a Certificate of No Objection in 2014 from the Indian Ministry of Civil Aviation and in September 2016 it took delivery of its first aircraft. mine, ah Bombardier CRJ 200. With ‘Airline Operator Certificate’ to 3 February 2017, The airline commenced operations on 15 February with its first flight from Delhi to Durgapur via Kolkata. At its peak in 2017, Zoom Air flew to seven destinations in India with two CRJ 200s while five more are expected to enter service in the coming months.

With Indian skies having seen CRJ 200 (Jetlite) operations in the past, it is easy for trained personnel and license holders (Pilots, Engineers, Crew) to come and so Zoom Air seems ready for a very promising future in Indian skies. The airline’s ambitious Phase 1 expansion plans have Delhi as a hub connecting to Lucknow, Ranchi, Aizawl, Aurangabad, Chandigarh, Dharamsala, Dimapur, Kulu, Hyderabad Int’l, Jorhat, Mumbai Int’ l, Shillong and Srinagar.

Zoom Air staff (Photo credit:

The long period of conception to establish an Airline from scratch, has been known by many people. Along with this, India’s business environment, and the time it takes to achieve economies of scale, needs to be handled more maturely by the Regulators. However, as airlines struggle to keep up with two of their planes even as the other five are still in the process of launching, a somewhat high-handed approach by the Indian Regulatory Authority dealt a heavy blow to the airline.

In July 2018, the airline’s operating licenses were suspended by the Directorate General of Civil Aviation of India (DGCA) citing safety concerns. So, even before the Airline could reach sustainable mass (which was expected to achieve economies of scale with its planned 7 aircraft), all operations were suspended for until October 31, 2019.

With the momentum of growth already broken by the untimely suspension of operations, it becomes an enormous task for Airlines to get back on track. ‘Flight Safety’ is one of the important points of view that cannot be ignored or regulated as calling it helps to prevent many aviation incidents/accidents.

Moreover, as luck would have it, Covid 19 has made even the best airlines in the world gasp in amazement. Despite the devastation, a visit to Zoom Air’s Headquarters in Gurgaon somewhere in January 2022, left us in awe. It is worth appreciating and commending the enthusiasm and resilience of Zoom Air and its staff, that despite what competitors have suffered, airlines have continued to maintain their workforce throughout. grounding time and suspended operations due to Covid 19. With a Mr. Selvraj, the official and qualified Quality Control Manager, is pursuing fiercely with DGCA to reinstate the Authority. In charge of Aviation Operations, the Director is responsible for continuing to run the company while jointly holding the flock.

But then, as the saying goes, “Time is of the essence”, the delay in the resumption of activities also begins to take its toll. As seen in previous cases, some employees are barely aware of the circumstances the business is going through. With negligible revenue, while the outflow continues, sometimes wages are delayed or some perks stagnated. Empathy, trust and cooperation between employees and management plays a role in such circumstances to pass such trying times. However, there’s always that odd man (wo) swimming upstream when there’s a good reason to do so.

Since the beginning NCLT Litigation can be initiated by even one creditor, so in this case the application was filed under Section 9 of the Bankruptcy and Bankruptcy Code (IBC). Captain Samuel Ahmad Tarig Omer Ahmad, a foreign pilot with a contract with the Airline, cited that Zoom air had failed to pay Rs 54 lakh in salary to him, the creditor of the operation.

According to the default petition, Samuel joined in September 2016 as Chief of Fleet CRJ –Zoom Air rated Category with a monthly remuneration of $6200 per month.

It is reported that the debtor of the business failed to pay wages in November 2016, January through March 2017, January through June 2018 and again in August 2018.

The case, after careful consideration, attracted Court Consent on March 25, 2022. Thus, on 26 March 2022 in a notice to creditors, Administrator Aashish Gupta acted on behalf of the Court – a quasi-judicial body dedicated to dealing with the shutdown of Indian companies , ordered initiate the corporate insolvency settlement process for Zexus Air Services Private Limited.

However, as they say, “Not everything is lost,” initiating Bankruptcy can even turn out to be a blessing in disguise for Zoom Air and its steady staff.

Insolvency regulator according to the announced rules provide Promoter and other Stakeholders 90 days after initiation of Bankruptcy proceedings to regain control of the company through arrangements with Creditors.

Because insolvency is a ‘financial state – inability to pay debts’, so selling off part or all of the shares of the business is a possible solution in such cases. More than that in the case of Airline, wherein the Investor and those having an interest in the establishment of the Indian Sky Airline can easily access the registration signs and the Life signs. calls that are otherwise not easy to find and need the full procedure cycle. Zoom Air with its whole operating parts intact is an ideal choice that can easily be recommended for Investment or Acquisition by any successful company in this field like Grant Thornton and Begbies Traynor

There are many examples where companies under the hammer have been able to keep their mass in one way or another. A prominent recent example is the highly contaminated DHFL. NCLT after a long drawn out proceedings, finally ordered the merger of DHFL with Piramal Capital and Housing Finance Ltd (PCHFL) and the name of the company changed from DHFL to PCHFL.

The expected date for the end of the insolvency resolution process for Zexus Air is set to September 21, 2022 – 180 days from the commencement date. However, in the case of recovery (about 50%) it was found that this timeline has been stretched much longer than expected by 180 + 90 days.

The Bankruptcy and Bankruptcy Code (IBC), six years after its enactment in June 2022, has benefited many struggling businesses that have no other viable means to deal with. It is important to understand that there is nothing wrong with being in business and not every business makes money. Some simply went down due to unfortunate circumstances despite their best efforts as we see in this case. Zoom Air is now ready to pick upto say the least.

Covid 19 has devastated not only people’s lives but also damaged businesses across the globe. Now with the pandemic almost under control, airlines are doing business quickly and making up for the losses sustained over the past two years. It remains to be seen, whether Zoom Air, which is also on the verge of launching its own, will be able to overcome this hurdle on its own or with some outside assistance and fix its losses and zoom in on the sky. green light again.

~ Janaseva News is also on now Google News

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