SpiceJet Navigates Turbulent Skies Amid Insolvency Pleas

The National Company Law Tribunal has issued a notice to SpiceJet over an insolvency plea filed by Engine Lease Finance BV. The tribunal has directed SpiceJet to respond to the claims of payment defaults totaling USD 16 million. Proceedings are set for August 2024 amid ongoing disputes and creditor petitions.

The National Company Law Tribunal (NCLT) has issued a notice to SpiceJet in response to an insolvency plea filed by Engine Lease Finance BV, an aircraft engine lessor for the debt-laden airline.

A single-member NCLT bench has instructed SpiceJet to address the plea from Engine Lease Finance (ELF), which asserts a payment default exceeding USD 12 million (approximately Rs 100 crore), and has scheduled a hearing for August 2, 2024.

During proceedings, SpiceJet contested the plea's validity. ELF, which has leased eight engines to SpiceJet, claims that SpiceJet owes around USD 16 million, including interest and rental fees.

Initially, the matter was presented before the NCLT's Delhi bench on May 29. SpiceJet's objections, citing technical defects in ELF's plea, led the tribunal to allow the lessor an opportunity to rectify those errors.

Following rectification, the insolvency tribunal issued the notice to SpiceJet. Headquartered in Shannon, Ireland, ELF is a leading independent engine financing and leasing company. They entered a leasing agreement with SpiceJet in 2017, which the budget airline has reportedly defaulted on since April 2021.

SpiceJet argues a pre-existing dispute exists between the parties. ELF had previously approached the Delhi High Court in 2023 after terminating the lease for two engines, seeking possession. A settlement was reached, but ELF later claimed SpiceJet failed to comply with its terms and returned to court.

SpiceJet, facing multiple insolvency petitions from other creditors like Willis Lease and Aircastle Ireland Ltd, saw NCLT reject Willis Lease Finance and Wilmington Trust's pleas, with Celestial Aviation settling its case with the carrier. Petitions from Aircastle and Alterna Aircraft remain pending, and both Wilmington Trust and Willis Lease Finance have appealed the dismissal of their pleas.