The Commercial High Court of Colombo has granted a 14-day enjoining order restraining legal action to wind up SriLankan Airlines over unpaid international bond obligations amounting to $209 million.
The order, issued by Commercial High Court Judge Amali Ranaweera on Wednesday (2), prevents DB Trustees (Hong Kong) Ltd. and Law Debenture Trust (Asia) Ltd. from initiating liquidation proceedings against the national carrier in connection with its $175 million 7% Government-guaranteed bonds, which matured on 25 June 2024.
The move follows a letter dated 11 June 2025 from Law Debenture Trust (Asia) Ltd., acting as trustee, warning the airline of imminent legal proceedings under Section 272(a) of the Companies Act No. 7 of 2007, due to non-payment of both the bond’s principal and coupon payments.
According to court filings, SriLankan Airlines has defaulted on the bond’s principal of $175 million, as well as coupon payments totalling $34.3 million due across four previous dates: 25 December 2022, 25 June 2023, 25 December 2023, and 25 June 2024. The total outstanding liability thus stands at $209.3 million.
Appearing for SriLankan Airlines, counsel argued that neither DB Trustees nor Law Debenture Trust are direct creditors of the airline and therefore lack legal standing to file a winding-up petition. The court was further informed that the bonds in question are guaranteed by the Government of Sri Lanka, which is currently undergoing a comprehensive debt restructuring process.
Deputy Solicitor General Viraj Dayaratne, appearing for the Attorney General, confirmed the Government’s guarantee on the bonds and its ongoing efforts to restructure sovereign and guaranteed debts.
In response, the court issued an enjoining order barring the trustees and their agents from instituting any action or proceedings aimed at winding up the airline for a period of 14 days.
SriLankan Airlines has retained Lazard Frères SAS as its international financial adviser and Norton Rose Fulbright LLP as its legal adviser to negotiate a potential restructuring of the 2024 bonds, including possible repayment terms.
The next hearing is expected to determine whether the enjoining order will be extended or revised in light of the airline’s ongoing discussions with bondholders.
