SpiceJet Faces $15 Million Judgment as Aircraft Lessors Seek Enforcement
In a significant development, two aircraft lessors have secured a summary judgment worth $15 million against SpiceJet, a prominent Indian carrier. These lessors are expected to pursue enforcement through India’s National Company Law Tribunal (NCLT). Additionally, reports indicate that three more legal cases are pending against SpiceJet in UK courts.
The judgment was delivered on May 10 by Justice David Foxton at the Commercial Court of the High Court of Justice in a case titled GASL Ireland Leasing A-1 Limited v SpiceJet Limited. GASL was awarded $8,490,312.39. Shortly thereafter, Deputy Judge Charles Hollander, in the case VS MSN 36118 CAV Designated Activity Company v SpiceJet Limited, awarded VS MSN $5.89 million.
The GASL case revolves around a B737-800 aircraft, formerly registered as VT-SLI (msn 29670), which SpiceJet leased in May 2017. The airline owed $5,334,121.25 in unpaid leases by February 2022 and faced challenges related to the non-return of the aircraft. GASL obtained a summary judgment from the UK court, but the amount remains unpaid. The lessor alleged that SpiceJet failed to meet the predetermined conditions for aircraft redelivery. After a dispute over the return of the aircraft to the lessor, it was finally handed over to GASL in August 2022. An independent expert described the aircraft’s condition as the “worst” seen for an in-service aircraft presented for redelivery. GASL sought payment for the unpaid lease amounts and the costs of repairing the B737-800, totaling over $8 million. SpiceJet was unrepresented during the final stages of the High Court hearing, yet Justice Foxton’s decision favored GASL, emphasizing that it was not a mere formality.
The VS MSN case involved a B737-700 aircraft, previously registered as VT-SLP (msn 36118), which SpiceJet leased for 96 months starting in April 2018. By September 2022, the airline had accumulated over $4 million in overdue lease payments, despite a $1.65 million lease waiver agreement reached in November 2020 and an arrangement to make monthly installments to reduce the outstanding amount. However, SpiceJet failed to fulfill many of these installments.
Throughout the legal proceedings, SpiceJet argued that despite defaulting, they should not be held responsible for future rental payments as per the original contract. Judge Hollander acknowledged the severity of the clause but ruled that SpiceJet was fully aware of the provision entitling VS MSN to full payment until May 2026 in the event of a default. Consequently, the lessor was awarded nearly $6 million, covering the lease payments owed to date and future payments until the end of the lease. Advanced data from ch-aviation fleets indicates that the aircraft, VT-SLP, is still with SpiceJet and in active service.
According to MoneyControl, three additional cases against SpiceJet are currently pending in UK courts. While the petitioners are not specifically identified, it is mentioned that one of them is a Turkish entity. GASL and VS MSN are now expected to approach the NCLT to seek enforcement of the UK court orders. They will join Aircastle, Wilmington Trust Co Trustee, and Willis Lease Finance on the NCLT’s list of cases. All three lessors are aiming to have SpiceJet declared insolvent. Notably, real estate and construction firm Acres Bidwell recently settled its insolvency case against the airline.
Meanwhile, Aircastle has intensified its pressure on SpiceJet by filing a second plea against the airline at the NCLT on June 14. Typically, the NCLT allows petitioners to file only one plea (Aircastle filed its first petition on April 28). It is anticipated that the mounting number of cases against SpiceJet will compel the NCLT to initiate the insolvency process, despite CEO Ajay Singh’s assertion that such an outcome is unlikely. Aircastle’s first plea is scheduled for a hearing in Delhi on July 17, while the tribunal has yet to decide on accepting the lessor’s second plea.