Lessor Willis Lease Finance Asserts Right to Pursue SpiceJet Over Unpaid Leases

Willis Lease Finance has stated that it is entitled to pursue SpiceJet for unpaid aircraft leases, defending its position before India’s National Company Law Tribunal (NCLT). The lessor argued that the service agreement signed with SpiceJet permits it to file an insolvency petition against the airline under India’s Insolvency and Bankruptcy Code (2016). SpiceJet has contended that Willis is not an operational creditor and has urged the tribunal to dismiss the insolvency petition.

During the NCLT hearing on October 9, Willis Lease Finance’s counsel asserted that the service agreement grants the lessor the right to “take reasonable efforts to enforce rights and remedies of the lessor under the lease.” The counsel also highlighted correspondence between Willis and SpiceJet acknowledging the lessor’s role in debt negotiations. However, SpiceJet’s counsel argued that a service agreement is not equivalent to an assignment agreement.

The dispute revolves around four special purpose vehicles (SPVs) established by Willis, including Willis Lease (Ireland) Ltd, West IV Engine Ireland Ltd, West III Engine Ireland Ltd, and West V Engine Ireland Ltd, which leased a total of 13 engines to SpiceJet. SpiceJet’s counsel contends that these SPVs should individually pursue the airline at the tribunal rather than Willis Lease Finance as their ultimate owner.

Willis Lease Finance is one among several lessors seeking to have the NCLT declare SpiceJet insolvent. The airline, in turn, questions the maintainability of cases brought by other lessors, including Wilmington Trust SP Services (Dublin) and Aircastle. While a lease dispute with Celestial Aviation Services is set to be settled out of court, debts held by SPVs under Carlyle Aviation Partners were converted into equity earlier this year.

The case, Willis Lease Finance Corporation Limited v. SpiceJet Limited (case no: C.P. (IB) – 249/2023), will resume at the NCLT on October 17. In a separate development, judges at the NCLT suggested that parties involved should consider the impact of impending changes to Indian laws aligning with the 2001 Cape Town Convention. These changes, making it easier for lessors to repossess and repatriate aircraft, have led to the removal of India from the Aviation Working Group’s negative watchlist.