SpiceJet's Engine Trouble: Court Orders Return Of 3 Engines To Lessors Amid Debt Defaults

New Delhi: The troubled low-cost carrier SpiceJet was ordered by a single Judge to Ground three Engines and Return them to their Lessors, Team France 01 SAS and Sunbird France 02 SAS, and a division bench of the Delhi high court affirmed that decision on Wednesday. Leading the court was Justice Rajiv Shakdher, who noted that it may be costly to lose money and assets if the lessors were prevented from exercising their Contractual Rights while the airline's finances were "Weak”.

SpiceJet was in default and had not paid any previous or present dues, according to documents reviewed by the bench, which also included Justice Amit Bansal. The Court declared that SpiceJet had broken an agreement to pay arrears internally and that one of the provisions of the agreement was for the airline to ground its engines, which the lessors might take back if the agreement was broken.

“As demonstrated by its actions and the position it took in court—that is, by trying to raise money through loans and/or equity—SpiceJet's financial situation is clearly dire. The current State of SpiceJet may result in Team France and Sunbird France losing their engines as well as the money owed under the terms of their engine lease agreements. Within the engine lease agreements, Team France and Sunbird France are contractually entitled to the
repossession and export of the subject engines following the occurrence of a termination event,” the Court stated in a 33-page ruling.

In an attempt to stop the Airline from using the three engines, the lessors filed an August 14 order. They claimed that SpiceJet had paid $8.36 million, making the total amount of unpaid debt as of that date $9.41 million. Senior Advocate Amit Sibal represented SpiceJet before the Division Bench, while Senior Advocate Rajshekhar Rao represented the lessors.

According to a SpiceJet representative, "Our operations remain completely unaffected and continue as normal." The Court order is presently being examined by us.