On August 8, 2024, the Delhi High Court sharply rebuked SpiceJet, the budget carrier, for its failure to pay rental dues to its French engine lessors, Team France 01 SAS and Sunbird France 02 SAS, for three leased engines. Justice Manmeet Pritam Singh Arora criticized the airline for repeatedly failing to meet its financial commitments and questioned the use of the engines if SpiceJet was unable to pay. The court has demanded that SpiceJet’s directors provide personal guarantees for the dues or face serious legal consequences.

Personal Guarantees Demand

Justice Arora's remarks were stern, highlighting the need for personal guarantees from the airline's directors if SpiceJet fails to fulfill its obligations. The court has given SpiceJet until Monday to confirm whether the directors are willing to assume personal liability and to provide asset declarations. Failure to comply could lead to severe repercussions for the airline.

SpiceJet's Financial Strategy

In response, Sandeep Sethi, SpiceJet’s senior counsel, argued that grounding the aircraft would severely disrupt the company’s revenue and operations. Sethi disclosed that SpiceJet plans to raise ₹3,000 crore through a qualified institutional placement by September 30, 2024, to alleviate its financial strain. Additionally, SpiceJet is expected to pay ₹4.9 crore in a lump sum from the equity proceeds to cover the outstanding dues by the end of September.

Lessors' Stance and Legal Background

The lessors, represented by Rajahekhar Rao, have expressed frustration with the ongoing situation. They have indicated their reluctance to continue settlement talks and are seeking to reclaim their valuable assets. The lessors have been waiting for resolution since December 2023, when they filed a case against SpiceJet for over $20 million in unpaid dues related to three engines.

Also Read : Rushil Decor Shares Surge Ahead of Ex-Split Date, Record Highs and Stock Split Announced

SpiceJet's Broader Financial Struggles

SpiceJet, which is embroiled in multiple legal battles, including contempt charges and other financial disputes, has faced criticism for its failure to pay creditors and comply with court orders. The airline has also faced issues with delayed salary payments and defaults on provident fund contributions. The Delhi High Court had previously ordered the registration of a contempt case against SpiceJet’s directors for not returning two airframes and three engines to TWC Aviation Capital Ltd.

Current Market Position

As India’s sixth-largest airline with a 4% market share, SpiceJet employs over 8,000 people and is striving to maintain its operations amidst ongoing financial challenges. The company's situation underscores the difficulties faced by the airline as it navigates legal and financial hurdles.

Check latest IPO Review & analysis, Live GMP today, Live Subscription Status Today, Share Price, Financial Information, latest IPO news, Upcoming IPO News before applying in the IPO. The Upcoming IPOs in this week and coming weeks are Utssav Cz Gold Jewels Limited, Dhariwalcorp Limited, Ola Electric Mobility Limited, Ceigall India Limited, Afcom Holdings Limited, Picture Post Studios Limited IPO.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst & Finance Saathi Telegram Channel for Regular Share Market, News & IPO Updates

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX & Upstox.