SpiceJet (SG, Delhi International) has defeated one of several efforts have it declared insolvent after its legal counsel successfully argued against the maintainability of the case. On December 4, 2023, Justices Mahendra Khandelwal and Rahul Prasad Bhatbagar of the New Delhi bench of the National Company Law Tribunal (NCLT), dismissed the petition by Willis Lease Finance to have the LCC declared insolvent.
Willis, via multiple special purpose vehicles (SPVs) has variously placed 13 engines at SpiceJet. The Florida-based lessor was claiming some USD11 million, alleging the airline had failed to make lease payments on 11 of those engines. Willis withdrew the initial insolvency petition (case no. C.P. (IB)-121/2023) in March after it realised some unpaid invoices in that claim related to a period during Covid-19 when the Indian government granted immunity to debtors against insolvency petitions.
In April, Willis refiled an amended second petition, causing SpiceJet's counsel to argue that it was invalid because it "was for the same course of action as the first. SpiceJet's counsel also argued that Willis was not the appropriate party to pursue the airline, given its SPVs rather than itself, were the designated lessors and, therefore, the operational creditors.
Counsel for Willis attempted to refute those arguments, arguing that the second petition was a "mere refiling" and did not include new claims. He also argued that Willis was well within its rights to pursue SpiceJet and that having each SPV (there were four) running individual insolvency petitions was not appropriate. Counsel for Willis pointed to the lease's original services agreements that allow it to "take reasonable efforts to enforce rights and remedies of the lessor under the lease." He also pointed to correspondence between the lessor and lessee in which SpiceJet acknowledged Willis was handling debt negotiations. Willis submitted documents to the tribunal attesting that the SPVs had assigned it operational creditor status and the right to collect and distribute lease payments.
However, during a July NCLT hearing, the bench questioned the validity of the second petition and why it did not send a filing notice to SpiceJet per the terms of India's insolvency laws. This week, the bench rejected the arguments put by counsel for Willis. At the time of publication, the NCLT was yet to post the judgement and reasons for its decision on its website.
"The tribunal raised concerns regarding the initiation of a new insolvency plea for the same cause of action without prior notice to SpiceJet, as mandated by the provisions of the Insolvency and Bankruptcy Code, 2016," a SpiceJet spokesperson told ch-aviation. "Additionally, the tribunal questioned the initiation of a fresh plea for the same cause of action without obtaining the necessary court permission. It is noteworthy that Willis had previously filed a similar petition, which was also dismissed by the NCLT."
Willis Lease Finance CEO Austin Willis told ch-aviation they were yet to receive any order from the NCLT regarding the matter. "Willis Lease Finance will continue to pursue its rights in recovering the approximately USD11 million long overdue from SpiceJet under multiple lease agreements," he said.
Four separate entities also continue to maintain insolvency petitions against SpiceJet in the NCLT, with Aircastle having three separate actions running, and Wilmington Trust SP Services (Dublin) having two. SpiceJet is presently deploying a similar argument against Wilmington's case in the NCLT as it did for Willis, namely that Wilmington is not the operational creditor. It has also challenged the multiple petitions lodged by both lessors. In addition, Celestial Aviation Services Limited has an insolvency bid against SpiceJet in the NCLT, and IT and aviation specialist consulting company Raymach Technologies Pvt Ltd registered a case against the LCC in late November over a INR27 million rupee (USD324,000) default.
