NCLT to hear insolvency plea against SpiceJet on June 1

The National Company Law Tribunal (NCLT) on May 25 deferred a matter pertaining to SpiceJet lessor Aircastle’s petition seeking an insolvency plea against the Gurugram-based airline to June 1. The case is related to non-payment of dues by the carrier to Aircastle, Ireland-based aircraft leasing company that acquires, leases, and sells commercial jet aircraft to airlines around the world.

On May 8, the NCLT issued a notice to SpiceJet and directed it to submit a response to the lessor’s insolvency plea and work towards resolving its issues. The case was listed for hearing on May 17, which was further deferred to May 25.

As per the report, the parties fail to reach agreement on the settlement of the dispute and creditor moved to the tribunal, seeking an initiation of insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC).

Earlier this month, SpiceJet management said there was absolutely no question of filing for insolvency as the low-cost carrier initiated the process of reviving its grounded fleet with the $50 million funds received from the government's Emergency Credit Line Guarantee Scheme (ECLGS) and internal cash accruals.

"There is absolutely no question of filing for insolvency. Any rumour regarding the same is completely baseless. We are focussed firmly on reviving our grounded fleet and getting more and more planes back into the air. Work on this front has already begun and the company is using the $50 million ECLGS funds and our own cash," said Ajay Singh, chairman and managing director, SpiceJet.

Recently, SpiceJet unveiled plans to borrow around ₹400 crore to revive 25 grounded aircraft that will help it capitalise and make the most of the upcoming peak travel season. The Gurugram-based airline operates a fleet of Boeing 737s and Q-400s, and is one of the country's largest regional players operating multiple daily flights under UDAN or the Regional Connectivity Scheme.

The low-cost airline had recently restructured over $100 million outstanding dues to Carlyle Aviation Partner into equity shares and compulsorily convertible debentures (CCDs). Carlyle Aviation, which is an aircraft lessor, is the commercial aviation investment and servicing arm of private equity giant Carlyle's. Following the transaction, Carlyle Aviation will hold over 7.5% equity stake in the airline.

SpiceJet had earlier completed the hive-off process of its cargo and logistics division ‘SpiceXpress’ into a separate entity, SpiceXpress and Logistics Pvt Ltd. The hive-off paved the way for SpiceXpress to raise funds independently.