SriLankan Airlines has been granted a critical legal extension by the Colombo Commercial High Court last week, temporarily blocking any move to liquidate the national carrier.
The court ruling comes in the wake of a dispute over a USD 209 million bond default, which had placed the airline under serious financial threat.
With the stay order in effect until July 30, the airline has been given a narrow window to continue operations while the Sri Lankan government steps up high-level negotiations with international bondholders.
Officials hope the additional time will allow for a workable agreement to be reached, avoiding a potential collapse of the state-owned enterprise.
The government has indicated it is committed to protecting national interests and is actively pursuing debt restructuring options to ensure the airline’s long-term survival.
Law Debenture Trust (Asia), acting on behalf of DB Trustees (Hong Kong) the trustee of 7% government-guaranteed bonds has demanded that SriLankan Airlines settle a total outstanding amount of USD 209.3 million following a default in June 2024.
In a formal notice sent on June 11, the Hong Kong-based firm called for immediate payment of the bond principal along with USD 34.3 million in unpaid interest due in 2023 and 2024.
The trustee warned that failure to settle the dues within 21 days would constitute an inability to pay debts, paving the way for a winding-up petition against the national carrier.
An initial enjoining order was issued by Judge Amali Ranaweera on July 2, temporarily blocking the liquidation of SriLankan Airlines and adjourning the matter for 14 days.
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