SpiceJet Triumphs in Legal Dispute Against Wilmington Trust Over Insolvency Claims

In a notable legal victory for SpiceJet, the National Company Law Tribunal (NCLT) in India has rejected an insolvency petition filed by Wilmington Trust SP Services (Dublin), marking a significant win for the airline amidst ongoing financial challenges. The decision, announced on January 30 and confirmed to the Bombay Stock Exchange, underscores the airline’s resilience in navigating complex legal disputes with lessors.

The case, presided over by Justices Mahendra Khandelwal and Rahul Prasad Bhatnagar of the NCLT’s Delhi Bench, concluded that Wilmington Trust’s petition lacked merit and was not maintainable, leading to its dismissal. The bench’s ruling emphasized the differentiation between a trustee and an operational creditor, a distinction that played a crucial role in the case’s outcome.

SpiceJet’s defense argued convincingly that Wilmington, acting as a trustee, did not possess the status of an operational creditor, thereby challenging the basis of the insolvency petition. The argument highlighted that the debt in question was owed to Aircastle (Ireland) Ltd, not Wilmington Trust, pointing out that financial transactions and invoices were managed through Aircastle, which holds ownership over Wilmington Trust.

This legal victory follows a similar success story for SpiceJet against Willis Lease Finance, further establishing the airline’s adeptness at defending against insolvency claims by leveraging the technicalities of creditor relationships.

Despite these legal wins, SpiceJet remains embroiled in other insolvency petitions, with active cases from Aircastle and a new petition initiated by Alterna Capital Partners. Moreover, the airline faces financial pressure from other quarters, as evidenced by a recent Delhi High Court order mandating a USD4 million payment to engine lessors Team France 01 SA and Sunbird France 02 SAS by mid-February, part of a larger debt totaling USD12.9 million.

To mitigate its financial strains, SpiceJet’s shareholders have approved a fundraising initiative to secure INR22.5 billion (approximately USD270.6 million) through a share and warrants issue. This strategic move aims to bolster the airline’s liquidity, with initial proceeds already enhancing its cash reserves, as revealed in an internal staff memo.

SpiceJet’s series of legal and financial maneuvers highlight the airline’s ongoing efforts to stabilize its operations and secure its position in the competitive aviation market. The outcome of these legal disputes and financial strategies will be closely watched as SpiceJet continues to navigate the challenges ahead.