NCLT Ruling Restricts Lessors from Reclaiming Go First Aircraft
In the face of financial and operational challenges, Go First has reason to feel relieved on Wednesday. The ruling by the NCLT not only accepts the airline’s request for voluntary insolvency resolution, but it also prevents lessors from repossessing the company’s 45 aircraft, a move that several lessors had sought in recent days. Thanks to the crisis-ridden Go First’s admission into insolvency resolution and the resulting moratorium, the airline can, for the time being, avoid the risk of losing any planes from its fleet.
Over the past few days, multiple lessors of Go First have approached the DGCA, the aviation regulator, to request the deregistration of a total of 45 aircraft under the Cape Town Convention. The relevant authority must implement such a request made by a lessor within five working days, according to regulations.
Go First
An expert in the aviation industry stated that lessors began submitting their repossession requests for Go First planes on May 4. However, considering that there were three consecutive holidays on May 5, 6, and 7, the five-working-day deadline has not yet been completed. Given this context, the recent NCLT ruling has effectively prohibited lessors from reclaiming the planes, as confirmed by the expert.
According to a legal expert involved in the Go First insolvency case, the current moratorium prevents lessors from reclaiming planes at this time.
As per the regulations, if a lessor has invoked the Irrevocable De-registration and Export Request Authorisation (IDERA), the respective aircraft must undergo the deregistration process.
The National Company Law Tribunal (NCLT) issued an order on Wednesday that not only prohibits the “recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor,” but also applies to Go Airlines (India) Ltd, the company operating air services under the brand name Go First.
The airline presented its case before the NCLT, stating that its primary assets consist of a total of 54 aircraft. Out of these, P&W’s non-supply of engines has grounded 28 aircraft, while the remaining 26 aircraft are operational.
According to the airline’s submission, if immediate protection under the moratorium provided by Section 14(1) of the Insolvency and Bankruptcy Code (IBC), 2016 is not granted, the carrier will lose all of its assets.
Go First’s application reveals that it has defaulted on payments amounting to Rs 2,660 crore to aircraft lessors and Rs 1,202 crore to its vendors.
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