SpiceJet is facing new insolvency proceedings initiated by aircraft lessor Aviator ML 29641 Ltd due to unpaid dues totaling ₹58 crore. The lessor asserted that the budget airline has not fulfilled its rental obligations for a leased Boeing 737.
The request was presented for consideration at the National Company Law Tribunal (NCLT) Delhi before a panel consisting of judicial member Mahendra Khandelwal and technical member Dr. Sanjeev Ranjan.
Advocate Shyam Kapadia, representing the lessor, argued that the airline owes ₹58.64 crore or $7 million in lease payments. He maintained that before submitting the plea, the lessor had issued the airline a notice under Section 8 of the IBC. However, the airline only replied to the notice after the plea had been filed. He commented,
“The response does not contest the lease or the outstanding amount. It merely refers to an alleged settlement.” SpiceJet’s attorney stated that the airline has challenged the debt, asserting that the lessor neglected to acknowledge the objections raised by them. “We have submitted our response to the demand notice and outlined our objections regarding the unpaid dues claimed by the lessor,” remarked SpiceJet’s attorney.
The National Company Law Tribunal (NCLT) declined to issue a notice to the airline while instructing the lessor to submit SpiceJet’s reply and scheduled the matter for further discussion on November 11. SpiceJet is currently confronted with multiple insolvency petitions filed by its vendors and lessors, although the NCLT has yet to admit any petitions so far.
Legal issues arise for SpiceJet
Lessees including Wilmington Trust SP Services (Dublin), Willis Lease Finance, Celestial Aviation, Aircastle, Alterna Aircraft, and AWAS 36698 Ireland have sought recourse from the tribunal against the airline.
SpiceJet has been embroiled in a series of insolvency petitions, primarily from its lessors, since the beginning of 2023. In September 2024, the NCLT issued a notice to SpiceJet in response to an insolvency petition filed by Techjockey Infotech, an operational creditor. This company claimed that SpiceJet defaulted on nearly ₹1.2 crore owed for software services they provided.
In late 2023 and early 2024, the NCLT rejected two insolvency petitions against SpiceJet filed by the lessors Wilmington Trust SP Services and Wills Lease Finance. Both of these lessors have now appealed to the National Company Law Appellate Tribunal (NCLAT).
Last month, the Delhi High Court affirmed an order mandating SpiceJet to ground three of its engines due to defaulting on payments to French engine lessors.
Last week, SpiceJet revealed a settlement agreement with Irish aircraft lessor Babcock & Brown Aircraft Management, effectively resolving a dispute valued at $131.85 million. This development comes on the heels of the airline’s successful fundraising of ₹3,000 crore via a Qualified Institutional Placement (QIP), an essential move in its journey towards financial recovery.
Moreover, SpiceJet is poised to secure ₹736 crore from a prior funding round, which will further enhance its financial resilience and growth potential.
This influx of capital is crucial for SpiceJet to tackle its financial hurdles and fulfill obligations to various creditors, especially lessors entangled in ongoing legal battles in the NCLT, Delhi High Court, and the Supreme Court concerning unpaid dues. Recent judicial rulings have necessitated the grounding of leased engines and aircraft as a result of these outstanding payments, compounding the airline’s challenges.
Expansion Plans
As reported by the media, SpiceJet’s Chairman and Managing Director Ajay Singh expressed that the airline intends to expand its fleet to 100 aircraft by 2026. Singh noted that SpiceJet is working swiftly to bring its 36 grounded aircraft back into operation, which are currently inactive due to a shortage of spare parts. By March 2025, the airline anticipates having a fleet of 40 aircraft, matching that of Akasa Air, with intentions to add another 40 subsequently.
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