SpiceJet faces yet another insolvency case from engine lessor

Engine Lease Finance BV, an engine lessor of troubled airline SpiceJet, has filed a fresh insolvency plea against the carrier, saying it hasn’t been paid rental dues totalling more than $16.72 million, including interest, for eight leased engines. 

The Delhi bench of The National Company Law Tribunal (NCLT) heard the plea on Wednesday and sought responses from both parties. The hearing was adjourned to Thursday after SpiceJet’s counsel told the court they had received the petition only that morning and needed more time to respond.

The dispute originates from a 2017 agreement through which Engine Lease Finance leased engines to SpiceJet. The airline allegedly began defaulting on payments from 14 April 2021. The lessor claimed it was owed $12.97 million plus $3.75 million in interest, and issued a demand notice under the Insolvency and Bankruptcy Code, 2016. In its response, SpiceJet said there was a pre-existing dispute between the parties. 

Also read: For SpiceJet to stay afloat, some crew will have to deplane

In December, Engine Lease Finance BV approached the Delhi High Court after settlement talks failed, alleging the airline only made partial payments and violated the terms of the agreement.

In October, SpiceJet had agreed to pay the lessor about $2 million and return the leased engines by 25 January. It eventually returned the leased engines in March on the court’s orders.

SpiceJet’s insolvency troubles

SpiceJet has faced several insolvency pleas in the NCLT over pending dues from various parties including Wilmington Trust SP Services (Dublin), Willis Lease Finance, Celestial Aviation, Aircastle, and Alterna Aircraft. 

In April, three entities—AWAS 36698 Ireland, AWAS 36694 Ireland, and AWAS 36695 Ireland—filed such a plea against the airline for allegedly defaulting on rental dues of 77 crore. 

Also read: Delhi HC grants SpiceJet three weeks more to return leased assets to TWC Aviation

The NCLT rejected the pleas of Willis Lease Finance and Wilmington Trust SP, while SpiceJet settled with Celestial Aviation. The pleas by Aircastle, Alterna Aircraft, AWAS 36698 Ireland, AWAS 36694 Ireland, and AWAS 36695 are pending. Wilmington Trust and Willis Lease Finance have moved the National Company Law Appellate Tribunal (NCLAT) to challenge the NCLT’s dismissal of their insolvency pleas.

Also read: Foreign pilots might get to ride India’s aviation boom for another year

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Published: 29 May 2024, 03:22 PM IST

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