NCLT seeks Aircastle's response to SpiceJet's plea questioning maintainability of its insolvency plea

Spicejet Ltd. | CMP Rs 27.94 | Shares of SpiceJet jumped 4 percent on June 8 morning after the low-cost airline said it will partner with FTAI Aviation, a leading aftermarket provider of engine services, to reduce maintenance expenses and aircraft downtime. On June 7, SpiceJet commenced Haj operations by operating special flights from Bhopal, Gaya, Vijayawada, Aurangabad and Srinagar. The Spicejet stock has declined 41 percent in the last year as the airline faces a cash crunch, legal battles and regulatory headwinds.

The National Company Law Tribunal(NCLT) on June 8 sought aircraft lessor Aircastle's response in SpiceJet's application questioning the maintainability of the former's insolvency plea.

Senior Advocate Krishnendu Dutta, who appeared for SpiceJet, told the tribunal that they were questioning the maintainability on the ground that Aircastle's power of attorney granting the authority to its representative is defective and also that they had not filed a proper affidavit.

The tribunal, after hearing his submissions, directed Aircastle to file a response to the application in two weeks. The application will now come up for hearing on July 17.

ALSO READ: SpiceJet partners with FTAI Aviation to restore fleet

The tribunal had on May 17 asked the Gurugram-based airline to file a response to the lessor’s insolvency plea and explore options for settlement. SpiceJet had accordingly filed a response to the plea, Aircastle sought for a short adjournment on May 25 to respond to the the airline's reply.

On May 11, SpiceJet said it is taking steps to revive its grounded fleet using the $50 million it received from the government's Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash accruals, as it sought to quash rumours of insolvency.

SpiceJet has been saying it has no intention of filing for insolvency and is focused on its business.

Aircastle confirmed that settlement talks with SpiceJet had not been fruitful and the airline's offer was not good enough.

The creditor moved NCLT claiming that SpiceJet has unpaid dues and sought initiation of insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC).

On May 8, a two-member principal bench of the NCLT headed by president Ramalingam Sudhakar issued the notice to SpiceJet and directed it to list the matter on May 17.

In April 2023, Aircastle initiated insolvency plea against low cost airline SpiceJet.

The development comes close on the heels of beleaguered budget carrier Go First filling for voluntary insolvency resolution proceedings.

SpiceJet, however, had said the development would not affect its operations and it was confident of resolving the matter without court proceedings. "The comments provided here are without prejudice to our rights and in no way should be deemed as an admission of any liabilities,” a spokesperson for the low-cost airline said.

On May 11, SpiceJet said it is taking steps to revive its grounded fleet using the $50 million it received from the government's Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash accruals, as it sought to quash rumours of insolvency.

SpiceJet has been saying it has no intention of filing for insolvency and is focused on its business.

SpiceJet aircraft deregistered by DGCA

On May 19, the Directorate General of Civil Aviation (DGCA) deregistered three planes of  SpiceJet at the request of lessors.

Of the three, two were non-operational and its operations had not been affected, SpiceJet said on May 19.

Earlier this month, Lessors Wilmington Trust SP Services, Sabarmati Aviation Leasing and Falgu Aviation Leasing approached the civil aviation regulator, requesting deregistration of three Boeing 737-800s over non-payment of dues.

The DGCA deregistered the planes with call signs VT-MXJ, MXF and SZJ.