NCLT suggests SpiceJet settle issues with aircraft lessors after clearing dues worth Rs 231 crore

The National Company Law Tribunal (NCLT) on Tuesday suggested that SpiceJet settle the issues with lessors who have sought the initiation of insolvency proceedings against the airline.

The tribunal's suggestion came amid a crisis at the carrier, where SpiceJet has issued shares in lieu of dues to nine aircraft lessors.

The NCLT was hearing a plea filed by Celestial Aviation Services Ltd, an operational creditor that had requested the initiation of insolvency proceedings against the airline.

A two-member NCLT bench observed that the airline is settling with some aircraft lessors by converting debt into equity.

"SpiceJet seems to be settling with other lessors by giving shares. Why don't you settle with these lessors as well?" the bench, comprising M M Khandelwal and Rahul Prasad Bhatnagar said.

This remark pertained to Celestial Aviation Services and four other lessors who have filed pleas against the airline.

Settlement with lessors

Furthermore, the bench suggested that, in its opinion, it is in the best interest of all parties involved to settle with the lessors and recommended that they convene to resolve the disputes.

The tribunal also noted that "banks have not filed insolvency petitions, only lessors have come forward."

On the previous day, SpiceJet had announced the allotment of 4.81 crore equity shares on a preferential basis to nine of its aircraft lessors in order to clear outstanding dues amounting to Rs 231 crore.

The fund crunch and grounded fleet has eroded SpiceJet's market share to 4.2 per cent as of July, lower than that of new entrant Akasa, which only began commercial operations in August 2022.

SpiceJet, which in February converted around $100 million in dues to aircraft lessor Carlyle Aviation into equity and debentures, still finds itself in legal battles with other lessors over dues.

The NCLT is scheduled to hear pleas from all SpiceJet lessors on September 15, 2023.

According to regulatory filings --  nine lessors who have been allotted shares include SASOF III (A13) Aviation Ireland DAC, SASOF III (A6) Aviation Ireland DAC, SASOF III (C) Aviation Ireland DAC, SASOF III (E) Aviation Ireland DAC, SASOF III (A19) Aviation Ireland DAC, SASOF II (J) Aviation Ireland DAC Citrine Aircraft Leasing Limited, Fly Aircraft Holdings Seven Limited, Fly Aircraft Holdings One Limited. 

(With PTI Inputs)