SpiceJet Faces Fresh Insolvency Hearings After Lessor Settlement Delays Tribunal Ruling

An Indian court announced on Wednesday that bankruptcy petitions filed by aircraft lessors against SpiceJet will be heard afresh by a new bench. The development follows a last-minute settlement reached between the airline and one of the leasing companies.

The ruling offers a reprieve for India’s fourth-largest airline, as its existing management will remain in control while the legal petitions are reconsidered. However, the decision represents a setback for aircraft leasing companies that have been engaged in a years-long legal battle to recover debts from the carrier.

The National Company Law Tribunal had prepared a judgment covering eight separate petitions against SpiceJet. The tribunal stated that the withdrawal of one petition following the settlement meant the impending ruling needed to be rewritten. Because a member of the judicial panel was scheduled to retire on Wednesday, the tribunal determined there was insufficient time to rewrite and deliver the judgment, necessitating a fresh hearing by a new bench.

Following the tribunal's order, SpiceJet’s shares pared earlier losses to trade down 2.1% at 10.95 rupees.

In an official statement, a SpiceJet spokesperson described the order as a positive step toward resolving outstanding matters. The airline stated that it remains committed to working closely and constructively with its partners to find mutually acceptable solutions. The exact financial amount claimed by the lessors was not immediately disclosed.

The legal proceedings come against the backdrop of sustained financial pressure for the carrier. SpiceJet's cash struggles have previously impacted operations, including delayed salary payments to pilots, as reported in June. The airline has also utilized financing secured under a government-backed credit programme in an effort to stabilise its operations.

Market data reflects the airline's operational contraction over recent years. SpiceJet’s market share dropped to 1.9% as of June, down significantly from approximately 15% at the end of 2019.

"This procedural reset buys critical time for SpiceJet's management to stabilize operations and negotiate directly with creditors outside an immediate insolvency resolution process. However, legal relief alone does not address underlying operational challenges. For an airline whose market share has contracted significantly since 2019, long-term viability will depend on rebuilding fleet capacity, honoring financial commitments to lessors, and restoring consistent service reliability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes