The HCM City People’s Court has made the verdict, forcing Indochina Airlines to pay the sum of 1.3 million dollars to the Asia Commercial Bank (ACB). However, the verdict does not mean that the case has been wrapped up.
The sum of 1.3 million dollars include the principal of 1.19 million dollars and the interests that Indochina Airlines, the first private airline in Vietnam, is obliged to pay regarding to the opening of letters of credit (L/C) for the making payment with the airline’s foreign partners.
In case Indochina Airlines cannot pay the debt, Ha Hung Dung, the General Director of the airline has the responsibility of paying the debt for the airline.
In October 2008, Indochina Airlines and ACB signed a contract on ACB credit providing to Indochina Airlines. The airline’s General Director Ha Hung Dung signed a letter of guarantee to repay debts for the airline, in case the enterprises cannot pay the debt to the bank.
Implementing the contract, ACB made a payment of 1.19 million to Komercni Banka A.S for Indochina Airlines. However, later, the airline cannot pay the debt to ACB, which has raised to a dispute between the two sides.
It is for certain that ACB wins the case, because it can show all necessary documents relating to the case. However, observers have commented that it is still unclear if the winner in the lawsuit can take back the debts.
The problem is that Indochina Airlines has been bogged down in the debts, while the Civil Aviation Authority of Vietnam CAAV has deprived the right for domestic air transportation of Indochina Airline, while the transport service license may also be revoked.
Indochina Airlines proposed CAAV to delay the deadline for revoking the license, saying that it needs some more time to restructure the enterprise and seek more capital. However, there has been no sign showing that the airline can arrange capital to resume its operation.
Thoi bao Kinh te Saigon has quoted an official from CAAV as saying that until November 3, the private airline still had not submitted the report about the flight resumption plan, though December is nearing.
Though Indochina Airline has mortgaged assets for the loan, experts say it is not easy to sell the assets to recover debts. Sources said that the house mortgaged by Indochina Airlines at ACB does not meet the requirements in formalities. Therefore, the court has rejected the ACB’s proposal to sell the house to take back debts.
As such, ACB only can hope to recover debt from Ha Hung Dung, who committed to pay debt for Indochina Airline, in case the air carrier cannot pay debts. However, problems still exist.
The court clearly stipulates that Dung only has to pay debt in case Indochina Airlines cannot pay debts. Lawyers said that in this case, this will much depend on Indochina Airlines’ capability. If there is the proof showing that Indochina admits the incapability to pay debts, will ACB be able to demand the debt payment from Dung.
Tran Huu Phuc, General Director of Vinapco, the air petrol supplier, one of the biggest creditors of Indochina Airlines, also told Thoi bao Kinh te Saigon on November 3, that he doubts about the possibility of recovering the debt of 24 billion dong from Indochina Airline.
Phuc went on to say that Vinapco has taken legal proceedings against Indochina Airlines to the HCM City Economic Court to demand the debt payment of 24 billion dong. .However, Phuc is not sure if he can demand the debt back, because he knows Indochina Airlines does not have money to pay.
Regarding the fate of Indochina Airlines, VnExpress has reported that the Ministry of Transport may revoke the business license of the airline. CAAV has confirmed that it fails to contact the airline over the last many months. All the fax messages, dispatches and legal documents sent to Indochina Airlines have returned because there was no receiver