Wilmington Trust’s Insolvency Plea Against SpiceJet Postponed by NCLT
Wilmington Trust SP Services (Dublin) Ltd, an aircraft lessor, has filed a petition with the National Company Law Tribunal (NCLT) to initiate the corporate insolvency plea resolution process against SpiceJet, a leading Indian airline, postponed by NCLT. However, the NCLT adjourned the matter on Monday, and it is now expected to be listed for hearing on July 16.
Other lessors have also filed two additional cases against SpiceJet under Section 9 of the Insolvency and Bankruptcy Code, 2016, making this the third case filed by Wilmington Trust against the airline. An aircraft lessor, Aircastle (Ireland) Ltd, filed a petition on April 28, and the bench has scheduled the hearing for July 17. Additionally, engine lessor Willis Lease Finance Corporation has also filed a case, with the hearing set for July 4.
SpiceJet, in response to the case filed by Aircastle (Ireland) Ltd, submitted an application on June 5 questioning the maintainability of the petition. The senior counsel representing SpiceJet argued that the petition had two defects and claimed that, according to Section 10 of the IBC, 2016. The airline was protected from default since the debt fell due in February 2021.
In a related development, both Wilmington Trust and Aircastle (Ireland) succeeded in deregistering two aircraft from the Directorate General of Civil Aviation (DGCA) in March. They invoked the provisions of Irrevocable De-registration and Export Request Authorisations (IDERA) to repossess the aircraft after SpiceJet defaulted on rental payments.
The ongoing legal battles between SpiceJet and its lessors highlight the financial challenges faced by the airline industry, particularly in the wake of the COVID-19 pandemic. Travel restrictions, reduced passenger demand, and financial losses have severely impacted the aviation sector.
SpiceJet
SpiceJet, one of India’s leading low-cost carriers, has been working to navigate these turbulent times. The airline has faced several financial hurdles in recent years, including a significant decline in revenue and rising debt. The COVID-19 pandemic further exacerbated the airline’s troubles, as international and domestic travel restrictions forced a decline in operations and revenue.
These insolvency petitions add to SpiceJet’s financial woes, potentially leading to further uncertainties for the airline. The NCLT’s decision to adjourn the hearing until July 16 provides a temporary respite for SpiceJet, giving the airline more time to strategize and present its case before the tribunal.
As the cases filed by Wilmington Trust, Aircastle (Ireland) Ltd, and Willis Lease Finance Corporation proceed through the legal process, the outcome will significantly impact the future of SpiceJet. The airline’s management will need to work closely with its lessors and other stakeholders to find a viable solution that ensures the airline’s financial stability and operational continuity.
The aviation industry, both globally and in India, is closely monitoring the developments surrounding SpiceJet’s insolvency pleas. The outcome of these cases will not only shape SpiceJet’s fate but could also have wider implications for the aviation sector, particularly in terms of lessors’ rights and the handling of insolvency cases in the industry.
It remains to be seen how SpiceJet will navigate through these legal challenges and whether it can emerge stronger from this turbulent period. The upcoming hearings in July will provide more clarity on the course of action and the future direction for SpiceJet, its lessors, and the Indian aviation industry as a whole.
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