SpiceJet insolvency case: NCLT allows lessor to withdraw plea, imposes fine on both Aviator ML & cash-strapped airline

The National Company Law Tribunal (NCLT) has allowed aircraft lessor Aviator ML to withdraw its insolvency plea against SpiceJet after the two sides reached a settlement, ET Now reported.

The tribunal, however, imposed a fine on both parties for informing it about the settlement after the case had reached the stage of final orders.

The NCLT's order means Aviator ML's insolvency petition will not proceed, but the court will re-hear seven other insolvency petitions filed against SpiceJet by aircraft lessors.


SpiceJet shares were trading at Rs 11.37 apiece on the BSE, up 1.6 per cent on Wednesday.

The airline welcomed the tribunal's order, calling it a positive step towards resolving outstanding matters.

“We view the order as a positive step towards resolving the outstanding matters and remain committed to working closely and constructively with our partners to find mutually acceptable solutions,” a SpiceJet spokesperson said.

The airline said it remains focused on rebuilding its operations and restoring its fleet after a challenging period.

“SpiceJet has been through a challenging period and is focused on rebuilding the airline, strengthening its operations and restoring its fleet. We remain committed to working with all our stakeholders in a spirit of cooperation as we move forward,” the spokesperson said.

Why did NCLT impose a fine?

The settlement was brought before the tribunal at the last minute, after the judges had already heard arguments and spent time preparing their orders.

The tribunal had earlier criticised SpiceJet and Aviator ML for informing it about the settlement only on the day the orders were due to be pronounced.

The NCLT has allowed the withdrawal subject to SpiceJet and Aviator ML paying the fine, according to ET Now. However, the fine amount was not known at the time of filing this report.

Seven insolvency cases to be heard again

The Aviator ML case was among eight insolvency petitions filed against SpiceJet by aircraft lessors over unpaid dues.

With Aviator ML withdrawing its plea, the remaining seven cases will now be reheard, keeping the threat of insolvency proceedings against the airline alive.

The tribunal had also sought clarity on whether SpiceJet was negotiating settlements with the other lessors. Lawyers representing some of the remaining lessors had asked the NCLT to continue with their cases.

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If the NCLT admits even one of the remaining petitions, SpiceJet could face a formal corporate insolvency resolution process under the Insolvency and Bankruptcy Code. An insolvency professional could then oversee the company's affairs while creditors seek a resolution of their claims.

SpiceJet's financial troubles

The proceedings come as SpiceJet continues to deal with financial pressure, grounded aircraft and reduced operations following years of losses and disputes with creditors.

The airline's domestic market share fell to 1.9% in June, compared with around 15% in 2019.

SpiceJet has received Rs 1.5 billion under a government-backed credit programme to support its operations, but its disputes with aircraft lessors have continued.

In July, two entities owned by the aircraft-leasing arm of China's ICBC sought deregistration of four Boeing 737 MAX aircraft leased to SpiceJet. At least two other lessors have also issued payment default notices to the airline this year.

The withdrawal of one insolvency plea provides SpiceJet some relief, but the seven remaining cases leave the airline facing continued legal and financial pressure.