Last-minute settlement costs SpiceJet, Aviator ML ₹15 lakh before NCLT

Last-minute settlement costs SpiceJet, Aviator ML ₹15 lakh before NCLT The National Firm Law Tribunal had prepared a judgment covering eight petitions against ‌SpiceJet, but stated the withdrawal of one of the petitions after the settlement meant the ruling needed to be rewritten.

Key points

• Aviator ML had filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) in 2024 against SpiceJet over an alleged default of ₹58.64 crore.
• The Tribunal nevertheless permitted Aviator ML to withdraw the petition under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
• After the order, SpiceJet's shares pared losses to trade down 2.1% at ₹10.95.
• The Registry has been directed to place the matter before the coram for further orders if the parties fail to pay the costs.
• Nevertheless, on the day of pronouncement, the Tribunal was informed that the parties had executed a settlement agreement overnight.

After the order, SpiceJet's shares pared losses to trade down 2.1% at ₹10.95. Photo Credit: Reuters.

Notably, the National Firm Law Tribunal (NCLT) on Wednesday allowed aircraft lessor Aviator ML 29641 Ltd to withdraw its insolvency petition against SpiceJet but imposed ₹15 lakh in costs on both parties for their last-minute settlement.

In practice, a special coram of Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh directed Aviator ML and SpiceJet to pay ₹7.5 lakh each to the Prime Minister's National Relief Fund within seven days.

Notably, the Registry has been directed to place the matter before the coram for further orders if the parties fail to pay the costs. The withdrawal order will take effect only after proof of payment is produced before the NCLT Registry.

Aviator ML had filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) in 2024 against SpiceJet over an alleged default of ₹58.64 crore. The matter had been argued and was listed for pronouncement on August 17 along with seven other insolvency petitions against the airline.

Nevertheless, on the day of pronouncement, the Tribunal was informed that the parties had executed a settlement agreement overnight. SpiceJet was stated to have admitted the debt and created an initial payment of $500, 000.

Meanwhile, the NCLT remarked it would permit only an unconditional withdrawal of the petition. It declined to record the terms of the settlement or grant liberty to revive the insolvency proceedings in the event of a breach.

For context, the Tribunal nevertheless permitted Aviator ML to withdraw the petition under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

For context, the NCLT expressed disapproval of the timing of the settlement, noting that the matter had already been argued and was awaiting pronouncement. The last-minute settlement additionally affected seven other insolvency petitions against SpiceJet. It had been reserved for orders.

In practice, the seven petitions were consequently de-reserved and directed to be placed before the appropriate coram.

Taken together, the developments around last-minute settlement costs SpiceJet, Aviator ML ₹15 lakh before NCLT point to a situation that is still moving, and the coming days should bring more clarity.