NCLT To Hear Insolvency Plea Filed By Engine Lease Finance Against SpiceJet On August 2

NCLT To Hear Insolvency Plea Filed By Engine Lease Finance Against SpiceJet On August 2

The National Company Law Tribunal (NCLT) has served a notice to SpiceJet regarding an insolvency plea filed by Engine Lease Finance BV, an aircraft engine lessor of the debt-ridden air carrier. The NCLT has directed SpiceJet to submit a response to the Engine Lease Finance (ELF) petition and scheduled a hearing for August 2, 2024.

During the proceedings, SpiceJet contested the admissibility of the petition, which alleges a payment default exceeding USD 12 million (approximately Rs 100 crore) according to ELF.

ELF, which has leased eight engines to SpiceJet, is seeking approximately USD 16 million in outstanding payments, including interest and rent.

However, SpiceJet cited technical defects and raised objections against ELF's plea following which the tribunal gave ELF an opportunity to rectify the errors.

After the rectification of the defects, the insolvency tribunal notified the airline. In 2017, an agreement was made with SpiceJet to lease engines. As per the petitioner's claim, the budget carrier has been defaulting on payments since April 2021. SpiceJet has argued that there exists a pre-existing dispute between them.

In 2023, ELF had taken legal action against SpiceJet by approaching the Delhi High Court after terminating the lease for two engines and sought possession.

Later, both the parties arrived at an agreement and ELF decided not to pursue the matter. Headquartered in Shannon, Ireland, ELF is the world's leading independent engine financing and leasing company.

However, ELF approached the High Court alleging that SpiceJet had failed to pay in accordance with the settlement terms. The matter is still pending before the Delhi High Court.

SpiceJet has faced insolvency petitions from several of its creditors, including Willis Lease, Aircastle Ireland Ltd, Wilmington and Celestial Aviation.

The NCLT rejected the pleas of Willis Lease Finance and Wilmington Trust. SpiceJet settled the case with Celestial Aviation.

The petitions filed by Aircastle and Alterna Aircraft are pending before the insolvency tribunal.

Wilmington Trust and Willis Lease Finance have both appealed to the National Company Law Appellate Tribunal (NCLAT), contesting the rejection of their insolvency petition by the NCLT.