Kingfisher Airlines Ltd. (KAIR), controlled by liquor tycoon Vijay Mallya, is struggling to resume services after five straight years of losses and mounting debt forced it to ground planes. India’s bankruptcy laws aren’t helping.
The carrier can’t emulate U.S. airlines that have gone through court-led Chapter 11 restructuring, as India doesn’t have any similar procedures for service providers. Under the existing law, a government body only oversees rehabilitation of companies with licenses to run factories.
Kingfisher’s troubles highlight how India’s corporate laws have failed to keep pace with growth and emergence of new businesses in Asia’s third-biggest economy. Lack of a modern legal framework makes it slower for struggling companies to renegotiate debts and cut cost, said Jai Pathak, partner-in- charge at Gibson, Dunn & Crutcher LLP. in Singapore.
“India needs a comprehensive bankruptcy law that will allow financially distressed companies to revive faster,” Pathak said. The existing system doesn’t “provide a framework by which companies can take preventive measures to avoid a further downward spiral.”
This Polygon Art is Entangled to show Sympathies to Our Kingfisher Hope You Get Well Soon!!