SpiceJet Bankruptcy Cases To Be Heard Afresh By New NCLT Bench After Lessor Settlement

A fresh bench of the National Company Law Tribunal (NCLT) will review bankruptcy petitions filed by aircraft lessors against SpiceJet after the airline reached a last-minute settlement with one of the lessors, according to a ruling by the Indian tribunal on Wednesday. The decision, reported by Reuters, provides temporary relief to the struggling airline but represents a setback for the aircraft leasing companies who have been seeking outstanding payments from SpiceJet for years.

The NCLT had prepared a judgment involving eight insolvency petitions, but the withdrawal of one petition following the settlement necessitated a revision. With one member of the judicial panel set to retire later on Wednesday, the tribunal deemed insufficient time to rewrite and deliver the judgment. Consequently, the remaining petitions will be heard by a newly constituted bench, meaning SpiceJet's current management will retain control of the airline during the reconsideration of bankruptcy proceedings.

The development has resulted in a 2.1% drop in SpiceJet's shares, trading at Rs 10.95. The airline described the decision as a "positive step" towards resolving its legal and financial issues and expressed commitment to working constructively with its business partners. However, financial challenges persist for SpiceJet, with the amount claimed by the aircraft lessors not disclosed.

The legal battles coincide with the airline's ongoing cash-flow difficulties, which have led to delays in salary payments to pilots and secured funding through a government-backed credit programme. SpiceJet's market share has declined significantly, standing at 1.9% in June 2023, compared to approximately 15% at the end of 2019.

The new hearings offer the airline additional time to address its outstanding disputes with lessors, but the company continues to grapple with substantial financial and operational challenges.