NCLT Dismisses Wilmington Trust’s Insolvency Plea Against SpiceJet

On January 29, the National Company Law Tribunal (NCLT) ruled against the insolvency plea filed by lessor Wilmington Trust SP Services against low-cost airline SpiceJet. The bench, comprising members Mahendra Khandelwal and Rahul Prasad Bhatnagar, stated, “The insolvency plea stands dismissed.”

Wilmington Trust SP Services had initiated the insolvency plea in June 2023, citing unpaid dues by SpiceJet. In May 2023, the Directorate General of Civil Aviation (DGCA) deregistered three planes of SpiceJet at the request of lessors, including one aircraft owned by Wilmington.

Lessors Wilmington Trust SP Services, Sabarmati Aviation Leasing, and Falgu Aviation Leasing approached the DGCA, seeking deregistration of three Boeing 737-800s due to non-payment of dues. The planes with call signs VT-MXJ, MXF, and SZJ were subsequently deregistered.

SpiceJet countered by asserting that Wilmington was a part of Aircastle, which had previously filed two insolvency pleas. Wilmington argued that it was a trustee of Aircastle and claimed that its insolvency plea was maintainable under the Insolvency and Bankruptcy Code, 2016, as a trust can be classified as an operational creditor.

Wilmington’s lawyer, Ajay Kumar, presented various documents and agreements to establish the distinction between Wilmington and Aircastle. He urged the court to issue a notice and request SpiceJet to file a response.

Senior advocate Krishnendu Dutta, representing SpiceJet, contended that Wilmington and Aircastle were the same entity, making it the third insolvency plea against SpiceJet by the organization. Dutta argued that an insolvency plea by a trustee of a company was not maintainable.

This marks the second instance in the last two months where NCLT has dismissed an insolvency plea against SpiceJet. In December 2023, a similar plea by aircraft lessor Willis Lease Finance was dismissed over unpaid dues, with SpiceJet challenging the maintainability based on technical defects in their earlier withdrawn plea. In 2023, three lessors filed four insolvency pleas, and NCLT issued notice only in Aircastle’s plea, leading to a subsequent challenge by SpiceJet on technical grounds.