SpiceJet Faces New Insolvency Cases Amid Settlements
SpiceJet (SG), the low-cost carrier based in Delhi, is facing new insolvency petitions from a lessor and a logistics company, coinciding with its recent settlement of a lease dispute with another entity. This development underscores the ongoing financial challenges faced by the airline as it navigates its obligations amidst multiple legal claims.
Eusu Logistics India Pvt. Ltd. has filed a petition, claiming that SpiceJet owes INR 19.4 million (approximately USD 230,729) for unpaid freight services. In a related case, aircraft lessor Falgu Aviation Leasing Ltd. has approached the National Company Law Tribunal (NCLT), asserting a claim of INR 680 million (about USD 8.1 million). These two new cases add to the growing list of creditors seeking payment from the airline, which already includes TechJockey InfoTech Private Limited, Alterna Aircraft V.B. Limited, DAE Capital’s special purpose vehicles, and Aviator Capital SPV.
During a hearing on October 25, SpiceJet’s legal counsel informed the tribunal that the airline had successfully reached a settlement with Shannon Engine Support Limited. Initially, the lessor was claiming USD 4.5 million, but the airline managed to negotiate the amount down to USD 2 million. SpiceJet characterized this settlement as “amicable,” effectively concluding all legal proceedings between the two parties.
This settlement follows SpiceJet’s recent agreements with Aircastle Ireland Limited, which involved three separate insolvency petitions related to different aircraft, and Wilmington Trust SP Services (Dublin). SpiceJet disclosed that settling these claims would cost the airline approximately USD 5 million.
Earlier this month, the airline also resolved a significant lease dispute involving three BBAM special purpose vehicles, settling a USD 131.85 million claim for USD 22.5 million. Furthermore, in late September, SpiceJet settled a USD 16.7 million claim with Engine Lease Finance Corporation, although the amount paid in this case was not disclosed.
These settlements come on the heels of SpiceJet raising INR 30 billion (USD 356.8 million) in September, a portion of which was earmarked for addressing lease arrears and other pressing financial liabilities. The funds raised are crucial for the airline as it seeks to stabilize its operations and maintain its position in the competitive aviation market.
Despite these efforts, the accumulation of insolvency petitions reflects the ongoing struggles of SpiceJet to manage its financial obligations. The airline has faced significant operational challenges in recent months, exacerbated by rising costs and a fluctuating market environment.
As SpiceJet works to resolve its outstanding debts and streamline its operations, the outcome of these new insolvency cases will be pivotal in determining its financial stability. The airline’s strategy of negotiating settlements is a critical step in addressing its liabilities, but the ongoing legal battles highlight the complex landscape in which low-cost carriers operate in India.
In summary, while SpiceJet has made progress in settling some of its financial disputes, the emergence of new insolvency petitions signifies that the airline still has considerable challenges ahead. As the situation evolves, the airline’s ability to manage its debts will be crucial for its continued operation and growth in the Indian aviation sector.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com