Willis Lease Finance says it is entitled to pursue SpiceJet (SG, Delhi International) for unpaid aircraft leases on behalf of special purpose vehicles (SPVs), telling India's National Company Law Tribunal this week that the service agreement signed by SpiceJet allowed it to do so.
Appearing before the Delhi tribunal bench on October 9, counsel for Willis said the lessor was within its rights to file an insolvency petition against SpiceJet under s.9 of India's Insolvency and Bankruptcy Code (2016). Counsel for SpiceJet has argued that Willis is not an operational creditor of the airline, and that the tribunal should dismiss its insolvency petition. In previous hearings, SpiceJet's counsel revealed that Florida-based Willis used four SPVs to lease engines to SpiceJet, namely Willis Lease (Ireland) Ltd, West IV Engine Ireland Ltd, West III Engine Ireland Ltd, and West V Engine Ireland Ltd. Counsel argued that it should be those entities pursuing SpiceJet at the tribunal, not their ultimate owner.
As reported this week in The Economic Times, counsel for Willis has told the NCLT that the service agreement allows it to "take reasonable efforts to enforce rights and remedies of the lessor under the lease." He also pointed to correspondence between Willis and SpiceJet acknowledging that Willis was handling debt negotiations. However, SpiceJet's counsel said a service agreement was not an assignment agreement.
The four SPVs had placed a total of 13 engines at SpiceJet. In response to arguments each SPV should file separate insolvency petitions, counsel for Willis said it did not wish to run multiple proceedings and a single proceeding was appropriate. Willis is one of several engine and aircraft lessors attempting to have the NCLT declare SpiceJet insolvent. However, the airline has also questioned the maintainability of cases brought by Wilmington Trust SP Services (Dublin) and Aircastle. As reported by ch-aviation, a lease dispute with Celestial Aviation Services involving nine aircraft is to be settled out of court, while debts totalling USD27.9 million held by SPVs under the control of Carlyle Aviation Partners were converted into equity earlier this year.
The Willis matter, Willis Lease Finance Corporation Limited v. SpiceJet Limited (case no: C.P. (IB) - 249/2023), will return to the NCLT on October 17.
Separately, the Aircastle and Wilmington matters were listed for mention at the NCLT on October 10. During that hearing, the judges suggested all parties consider the impact of an Indian government decision to bring domestic laws into line with the 2001 Cape Town Convention. The impending changes to India's Insolvency and Bankruptcy Code (2016) mean that asset-freezing orders will not apply to aircraft frames and engines, making it easier for lessors to repossess and repatriate aircraft. Because of the difficulties lessors have faced getting aircraft and engines out of India when disputes and insolvencies arise, the Aviation Working Group (AWG), a global watchdog representing aircraft manufacturers and leasing firms, had put India on a watchlist with a negative rating. As a result of the decision to change the bankruptcy law, AHG has lifted the negative rating.
