SMBC Aviation Capital Challenges NCLT Order Shielding Go First from Lessor Recovery
In a new twist to the ongoing financial crisis faced by Go First Airlines, one of its aircraft lessors, SMBC Aviation Capital, has moved the National Company Law Tribunal (NCLT) to challenge its recent order. The order, which admitted Go First’s plea for voluntary insolvency and initiated Corporate Insolvency Resolution Process (CIRP) proceedings, also granted the airline protection under a moratorium from recovery by lessors and lenders. The NCLT will hear the case challenging its order.
The NCLT’s order came on Wednesday, following Go First’s plea for insolvency proceedings. The tribunal appointed Abhilash Lal as the insolvency resolution professional (IRP) and instructed the suspended board of directors to cooperate with him. Additionally, the NCLT ordered the suspended directors to deposit Rs 5 crore to cover immediate expenses.
As a result of the ongoing financial turmoil, Go First has already canceled all flight operations until May 19, citing operational reasons. The airline issued an apology for the inconvenience caused to its customers.
Go First
In response to the bankruptcy claim made by Go First, US-based jet manufacturer Pratt & Whitney (P&W) has strongly defended itself, refuting any responsibility for the airline’s financial condition. A spokesperson for Pratt & Whitney stated that Go First’s allegations against the company were baseless and without merit. Pratt & Whitney intends to vigorously defend itself against the claims and pursue its own legal recourse.
Go First, which is owned by the troubled Wadia Group, had initially blamed Pratt & Whitney for its financial crisis, citing faulty engines as the cause. The airline was subsequently compelled to file an involuntary bankruptcy petition. Pratt & Whitney, in turn, pointed out that Go First has a history of failing to meet its financial obligations to the company.
A P&W official highlighted that the jet engine manufacturer had been providing support to Go First for several years, including throughout the challenges posed by the COVID-19 pandemic. However, the airline’s leadership chose to pursue litigation instead of resolving the financial issues amicably.
Furthermore, the developments surrounding Go First’s insolvency proceedings and the legal battle with SMBC Aviation Capital and Pratt & Whitney highlight the complexities and challenges faced by the airline. As the NCLT prepares to hear SMBC Aviation Capital’s challenge to the order protecting Go First from its lessors, the future of the airline remains uncertain. Stakeholders and industry observers will closely monitor the outcome of the case, which will have significant implications for the aviation industry in India.
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