SpiceJet: Are creditors using IBC for settlement leverage?

Lawyers say operational creditors using insolvency to recover dues is not what the IBC is for

- Krishna Yadav

India's bankruptcy courts are indignant at being used by creditors as a tool to recover dues from companies that are not really bankrupt, and for wasting their time.

On 19 November, judicial member Mahendra Khandelwal of the Delhi bench of the NCLT (National Company Law Tribunal) pulled up Engine Lease Finance B.V., the engine lessor of budget airline SpiceJet, for keeping a settlement pending in the IBC forum to leverage settlements with the airline.

"Both the Ld. Counsels submitted that the parties are trying to settle the matter amicably therefore sought time. Pleadings are complete. The adjournment on similar ground was sought on the last date of hearing i.e., 08.10.2024. Last opportunity is given to the parties to either settle the matter, failing which the matter will be proceeded as per law," the NCLT order stated.

Engine Lease Finance B.V. is among several lessors that have filed insolvency claims against SpiceJet.

Mint's research reveals that as of November 2024, 16 insolvency claims have been filed against the airline, primarily by lessors and some service vendors. Of these, five claims have been withdrawn after settlements, two are in the process of being settled, seven remain pending with the insolvency tribunal, and two have been dismissed by the tribunal. None of the claims has advanced to full insolvency proceedings.

Emailed queries to SpiceJet didn't elicit any response till press time.