Federal Bank seizes seaplane in Kochi to recover dues

In a first, Kerala-based Federal Bank has invoked the provisions of the Insolvency Code 2016 and has taken possession of a seaplane for recovering a defaulted loan. The incident happened in Kochi where the defaulter Seabird Seaplane is based in. 

Seabird Seaplane had obtained a loan and overdraft amounting to Rs 4.20 crore from the bank in 2014. “This has grown to Rs 5.95 crore by March, 2019,” the Times of India cited a member of the recovery team in its report. However, the loan was declared a non-performing asset in October 2016, after the company failed to repay the loan. 

As the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act did not envisage action on assets such as aircraft, Federal Bank invoked provisions of the Insolvency and Bankruptcy Code 2016 to recover the loan dues, the Hindu reported. The company is reportedly under liquidation currently. The bank stated that the action was necessitated as Federal Bank was actively pursuing recovery actions, especially against big ticket loan defaulters

According to the TOI report, Seabird Seaplane had bought the 10-seater Kodiak-100 amphibian, fixed-wing, single-engine aircraft from US-based Quest Aircraft Company LLC and might have "cost around $1.7-1.8 million (Rs 12-13 crore) back then".

The plane was left on the apron of Cochin International Aviation Services Ltd (CIASL), a subsidiary of Cochin International Airport Ltd, unused for nearly three years. The seaplane was taken under custody by K.K. Jose, insolvency professional, appointed by the National Company Law Tribunal. The proceedings at CIAL was co-ordinated by a recovery team of Federal Bank led by Babu K.A., senior vice president, and Mohamed Sageer T.A., vice president.