SpiceJet, Celestial Aviation exploring possibility of settlement, lawyers tells NCLT

Celestial Aviation is the fifth lessor to move an insolvency plea against SpiceJet. Pleas by lessors such as Willis Lease Finance, Aircastle and Wilmington are already pending at the NCLT

Low-cost carrier SpiceJet and aircraft lessor Celestial Aviation are exploring the possibility of settlement, lawyers representing the companies told the National Company Law Tribunal (NCLT) on October 10.

The NCLT has adjourned the case to November 7, owing to the settlement talks. Sources close to the development told Moneycontrol that the parties have reached a settlement.

Celestial Aviation is the fifth lessor to move an insolvency plea against SpiceJet. Pleas by lessors such as Willis Lease Finance, Aircastle and Wilmington are already pending at the NCLT. Willis' plea is likely to come up for hearing on August 8.

The NCLT on May 8 issued notice in Aircastle's first plea and sought the airline's response. SpiceJet had accordingly filed a response to the plea, and Aircastle sought a short adjournment on May 25 to respond to the airline's reply. Subsequently, SpiceJet filed an application questioning the maintainability of Aircastle's insolvency plea. SpiceJet has also questioned the maintainability of Aircastle's second insolvency plea and Wilmington's plea.

On October 10 NCLT told SpiceJet and its lessors Aircastle and Wilmington to study the impact of the recent notification removing aviation lease agreements from moratorium under the Insolvency and Bankruptcy Code, 2016.

On October 4, the Ministry of Corporate Affairs released a notification exempting relating to aircraft, aircraft engines, airframes and helicopters from moratorium to comply with the Cape Town convention.

Once a moratorium is imposed, activities such as institution of suits, continuation of pending suits, execution of judgments, transferring/disposing off assets and recovery or enforcement of security interest are prohibited.

As a result of this notification, the moratorium will not include agreements relating to aircraft, aircraft engines, airframes and helicopters. This would mean that aircraft, engine and helicopter leased and other agreements will not be bound by a moratorium.