Wilmington Trust moves insolvency plea against SpiceJet; hearing on Monday

Wilmington Trust, one of SpiceJet’s aircraft lessors, has moved the National Company Law Tribunal (NCLT) to initiate an insolvency process against the airline for non-payments of dues. The first hearing of this case will take place on Monday.

Wilmington Trust is an affiliate of Aircastle, which had last month filed a similar case at the NCLT. During this case’s ongoing hearings, SpiceJet said that Aircastle’s petition had defects and it could not be maintained. Consequently, the NCLT on June 6 asked Aircastle to submit its reply to SpiceJet’s rejoinder within two weeks.

On Sunday, a SpiceJet spokesperson told Business Standard, "Wilmington Trust’s parent is Air Castle. Each of the four aircraft leased by Air Castle had a separate entity. One such aircraft was from Wilmington Trust, an affiliate of Air Castle.”

SpiceJet, which has been dealing with a cash crunch for the last several months, had 64 aircraft in its fleet as on June 1, according to aviation analytics firm Cirium’s data. About 30 of the 64 planes are currently grounded, data showed.

Both the aforementioned cases have been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, which allows an operational creditor, which has not received payment from the corporate debtor, to file a case with the NCLT to initiate a “corporate insolvency resolution process”.

The Indian aviation sector is undergoing turbulence right now. Wadia-owned Go First filed an insolvency application last month and stopped operating flights from May 3. The no-frills carrier squarely blamed Pratt and Whitney for its cash crunch, stating that about half its aircraft were grounded due to a delay in engine supply.

SpiceJet has been making losses since FY19. The airline’s chairman and managing director Ajay Singh had in March said that the grounding of the entire Boeing 737 Max aircraft fleet by the Directorate General of Civil Aviation (DGCA) for over two years was a bigger disaster for the carrier than the impact of Covid-19.

 On March 13, 2019, all Max planes were grounded in India by the DGCA after two of them crashed abroad within a span of six months. This suspension was lifted on August 26, 2021, after Boeing made necessary rectifications in the aircraft.