SpiceJet case: Study impact of recent IBC notification on aviation leases, NCLT tells lessors

SpiceJet case: Study impact of recent IBC notification on aviation leases, NCLT tells lessors

The National Company Law Tribunal (NCLT) has taken significant steps in the case involving SpiceJet and its aircraft lessors, Aircastle and Wilmington. On October 10, the NCLT issued specific instructions to the parties involved in response to a recent notification that excluded aviation lease agreements from the moratorium as outlined in the Insolvency and Bankruptcy Code, 2016. The NCLT directed SpiceJet and its lessors to thoroughly assess the implications of this notification in the context of their ongoing legal dispute.

As a result of these developments, the cases related to the insolvency pleas initiated by aircraft lessors Aircastle and Wilmington against SpiceJet due to unpaid dues have been scheduled for further consideration on November 7. It’s noteworthy that SpiceJet has raised objections regarding the maintainability of these petitions, citing specific technical grounds.

These recent actions by the NCLT signal its commitment to addressing the evolving legal landscape and regulatory changes surrounding aviation lease agreements and insolvency proceedings. The upcoming hearing on November 7 will be a pivotal moment in this legal dispute, as it will provide further clarity on how the NCLT intends to handle these complex matters. The outcome will have significant implications for both SpiceJet and its lessors, setting a precedent for similar cases in the future.

These developments reflect the ongoing legal proceedings and negotiations between SpiceJet and its lessors, as well as the impact of regulatory changes on aviation lease agreements within the context of insolvency and bankruptcy proceedings. The NCLT’s instructions signify the need for a thorough assessment of the implications of recent notifications in this regard.

On October 4, the Ministry of Corporate Affairs issued a notification that included an exemption related to aircraft, aircraft engines, airframes, and helicopters from the moratorium imposed to comply with the Cape Town Convention.

A moratorium typically entails restrictions on various activities, such as initiating legal actions, continuing pending legal actions, executing judgments, transferring or disposing of assets, and pursuing the recovery or enforcement of security interests.

However, due to this notification, agreements pertaining to aircraft, aircraft engines, airframes, and helicopters will no longer be subject to the moratorium. This means that agreements involving the lease or use of aircraft, engines, and helicopters will not be bound by the restrictions typically associated with a moratorium, providing more flexibility in such transactions and arrangements.

The ongoing legal dispute between SpiceJet, a prominent low-cost airline, and Aircastle, an aircraft lessor, has evolved into a complex legal battle involving multiple legal actions and counteractions. Aircastle initiated two insolvency pleas against SpiceJet, prompting the National Company Law Tribunal (NCLT) to intervene. In response to the first insolvency plea, the NCLT issued a notice and scheduled a hearing for May 17, during which SpiceJet was instructed to provide a formal response to Aircastle’s insolvency petition. Additionally, both parties were encouraged to explore the possibility of reaching a settlement. SpiceJet complied by submitting a comprehensive response to Aircastle’s plea.

Following SpiceJet’s response, Aircastle requested a short adjournment to allow for a thorough review and response to SpiceJet’s reply. This adjournment is a typical procedural step in legal proceedings, granting parties the necessary time to present their arguments and responses effectively.

In the midst of these legal actions, SpiceJet also initiated a challenge to the maintainability of Aircastle’s petition. SpiceJet’s challenge revolves around two key issues: first, questioning the validity of Aircastle’s power of attorney, which grants authority to its representative, and second, asserting that Aircastle had not filed a proper affidavit in support of its insolvency petition.

This legal dispute underscores the intricacies and legal nuances involved in such complex matters. Both SpiceJet and Aircastle are actively using the legal process to protect their respective interests and seek resolution to their dispute through the appropriate legal channels. The outcome of these proceedings will be closely watched as it has implications for the aviation industry and the relationships between airlines and lessors.