'Willis lease financing not a creditor under law', SpiceJet tells NCLT

SpiceJet NCLT

Low-cost airline SpiceJet on July 21 argued at the National Company Law Tribunal (NCLT) that Will Lease Finance Corporation is not an operational creditor, as SpiceJet's lease agreements were with companies such as Wills Ireland, Willis Engine Securitisation Trust 1 among others.

SpiceJet argued that to be called a creditor under the Insolvency and Bankruptcy Code, 2016, these companies must have assigned their Willis Lease Finance Corporation to pursue litigation against it.

The arguments were made on the question of whether Willis Lease Finance Corporation's insolvency plea against SpiceJet was maintainable.

NCLT questioned the maintainability of the plea on the ground that Willis had already filed and withdrawn a petition against SpiceJet for the same dispute in March 2023.

Senior Counsel Virender Ganda, who appeared for Willis, argued that they had obtained the court's permission to withdraw and refile the insolvency plea and hence it is maintainable. He further argued that SpiceJet owed Wills $6.87 million and they had to therefore file an insolvency plea.  He took the court through various documents in the pleadings and argued that the last plea was withdrawn owing to certain technical defects and the present plea has been filed with the permission of the tribunal. Ganda argued that since the tribunal had already given them a permission to file a fresh insolvency plea, they need not issue a fresh notice to SpiceJet intimating them about initiating fresh insolvency proceedings.

Ganda urged the tribunal to direct SpiceJet to file an affidavit detailing their contentions on why the plea was not maintainable.

Appearing for SpiceJet, senior counsel Krishnendu Dutta argued that while NCLT's order from March 2023 gave them the permission to withdraw the plea, it did not give them the permission to refile it. He further argued that the plea was not maintainable since the court did not give Willis the permission to refile. Dutta argued that Willis was not the actual creditor as the engine leases had been entered into with different entities such as Wills Ireland, Willis Engine Securitisation Trust 1, among others. According to Dutta, these companies should have assigned their rights in Wills Lease Finance corporation to enable Willis to pursue this litigation, however they have not done so. Dutta argued that the threshold value to initiate insolvency proceedings as per law is rupees one crore, however, SpiceJet does not owe these companies one crore individually and hence the plea is not maintainable.

The tribunal declined Willis' request to direct SpiceJet to file an affidavit of their contentions and posted the case for further hearing on July 31.

On July 4, NCLT asked Willis to convince them on how a second plea of insolvency based on the same transaction is maintainable. 

Other insolvency pleas against SpiceJet:

There are a total of four insolvency pleas filed by lessors against SpiceJet. Two pleas by aircraft lessor Aircastle and one plea by lessor Wilmington are already pending in the tribunal.

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 had 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.