STATEMENT OF FACTS

HISTORY OF MALTA

Malta is a diverse country which possesses rich heritage and is a significant destination for tourism.
As a result of this the aviation industry grew and it got a big leap when govt of Malta decided to go
for liberalisation which allowed private sectors to enter into aviation business. Therefore, Govt
acknowledged the Importance of Civil Aviation Industry in promotion of tourism in Malta and it is
working as a catalyst in the growth of economy sector. It is also providing job opportunities to the
youth who are below 25.

REGULATIONS TO CONTROL NON-PROFIT ASSETS

In February 2018, the Finance Minister announced a five-fold increase in its airport capacity to
handle a billion trips per year under the new initiative known as NAMH NIRMAN but the only
drawbacks to this are the NPA (Non-Profit Assets) which are a major hurdle in the growth od Malta.
Malta have made several legislations to get protected by NPA like Recovery of Debts due to Bank
and Financial Institutions,1993 and the Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002.

AMMENDMENT OF NEW ACT TO CURB NPA

After failure of the prior acts to curb NPA the govt of Malta decided to form a new independent
body like Reserve Bank of Malta to look into realisation of NPA. This Act now had absolute power
ranging from recovery of debts, securitization and insolvency resolution of corporate debtor. The
company also recommended aboition of all previous laws because of which the Government of
Malta introduced Insolvency and Bankruptcy Code 2016 which was criticised by the opposition
government and also in the legal world.

EMERGENCE OF PRIVATE FIRM IN AVIATION INDUSTRY

Lilip Thomas completed his graduation in commerce in 1967 and was a recipient of various business
awards. He then joined the travel business at the age of 18 as a general sales agent for the Zebanese
International Airlines from 1967-74. He then opened his own business as Ted Airways which
gradually grew to a network of 60 branches, after having monopoly for over three and a half decades
the Maltain Government opened its aviation business for private airlines in April 1989. Mr. Lilip
Thomas saw this as an opportunity and commenced its commercial operations on May 5,1993.

DOWNFALL OF PRIVATE AIRLINES

After the liberalisation more than 20 start-up airlines had been launched but only few survived and
Ted Airways was among them. The Airways needed financial support and State Bank of Malta and
Shawn and Mac enterprises were two who provided loans for development and for running the
aviation business. Ted Airways approached Bank of Malta for a loan of Rs. 2000 crore for financing
new aircrafts. It also approached Shawn and Mac enterprises for additional loan of Rs.1000 cr in
Sian(of Borland) where its headquarter is situated. The financial creditors suggested to mortgage
some property to them as security to get the loan agreement.
DEFAULT OF LOAN BY TED AIRWAYS

Ted Airways and bank entered into a loan agreement and the rate of interest was decided to be
12.25% p.a with a monthly penal interest of 2% for period of default. Additional 1% was agreed in
default of non creation of securities. It was agreed that loan will be paid in 98 monthly instalments.
By 2016 Ted Aiways bought Air Qahara for Rs1600 crore and fulfilled its dream to be the only private
airline to fly international. But acquiring Qahara was proving to be the biggest financial drain on
Ted’s resources. But then the Mr. Lilip Thomas entered into a tie-up with another company named
TingTisher with Peter Malya which caused the company a loss of Rs1400 crore and it couldn’t repay
the loan amount in time.

REPERCUSSION OF DEFAULT

Financial creditor and operational creditor filed an application under section 8 of IBC to NCLT
showing a default of rs 1400 crores and suggested that Corporate Insolvency Resolution Proceedings
be initiated against it. There was already an agreement between Mr. Lilip Thomas that in case of
default the dispute will go to arbitration so it was contended that there was breach of contract and
Tribunal would have no jurisdiction