NCLT pulls up SpiceJet for last-minute settlement in insolvency case

The National Company Law Tribunal (NCLT) on Monday deferred its order in eight insolvency petitions against SpiceJet after the airline disclosed a last-minute settlement with one of its aircraft lessors, Aviator ML 29641 Limited. The tribunal, comprising Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh, strongly criticised the timing, saying precious judicial time had been wasted and that the conduct made a mockery of the system. Barandbench reports the tribunal said it had repeatedly asked the parties during hearings whether a settlement was likely, but Aviator ML had consistently said no settlement would take place.

Under the settlement, SpiceJet admitted the debt and made an initial payment of $500,000. Livemint reports the bench asked the airline why it had not settled dues with the other creditors, and in an oral order gave it two days to settle the remaining claims. The order in Aviator ML's case has been deferred to August 19, and orders in the seven connected petitions, filed by lessors including AWAS 36698 Ireland Limited and Falgu Aviation Leasing Limited, have been deferred to August 20. The bench made it clear that no further deferment would be allowed.

Creditors' counsel strongly opposed the deferment. Senior Advocate Kevic Setalvad, appearing for some creditors, argued that a bilateral settlement in one case should not stall orders in the other matters, calling it a "buy one, get eight free" arrangement. The NCLT recorded its disapproval but deferred the orders in view of the settlement. SpiceJet has been facing mounting financial losses, reporting a net loss of Rs 1,138.15 crore for the nine months to December, and its market share has fallen to 1.9 per cent.