Go First Bankruptcy Proceedings Upheld by NCLAT, Disappointing Lessors
The National Company Law Appellate Tribunal upheld the insolvency proceedings against financially struggling airline Go First on Monday, dealing a blow to the leasing companies attempting to reclaim their aircraft.
According to Reuters, several leasing companies, including GY Aviation Lease and SMBC Aviation Capital, contested a tribunal’s decision to grant bankruptcy protection to Go Airlines (India), widely recognized as Go First, earlier this month.
Go First
The appeals tribunal upheld the NCLT’s ruling from May 10, dismissing the lessors’ petition and directing them to file an appeal with the NCLT. The National Company Law Tribunal in New Delhi has granted permission to the Interim Resolution Professional (IRP) to proceed with the insolvency resolution process.
Go First, the low-cost carrier formerly known as XYZ, faced a financial crisis this year when approximately half of its 54 Airbus A320neos were grounded due to what the airline referred to as “faulty” Pratt & Whitney engines.
At present, Go First has suspended all flights and is not accepting new bookings due to operational reasons. In March, the airline held a 7% share of the world’s third-largest aviation market.
The airline attributes its financial difficulties to issues with engines provided by Raytheon-owned Pratt & Whitney, resulting in the grounding of nearly half of its Airbus A320neo fleet. Pratt & Whitney has dismissed these claims as baseless.
The National Company Law Tribunal in New Delhi has granted bankruptcy protection to Go First, resulting in a moratorium on the airline’s assets and leases. Abhilash Lal from Alvarez & Marsal has been appointed as the interim resolution professional to assume management immediately.
The bankruptcy filing has caused further complications for lessors, who have submitted requests to India’s aviation regulator seeking the return of approximately 40 aircraft leased to Go First due to missed rental payments.
India’s adoption of the Cape Town Convention in 2008 facilitated easier repossession of planes by lessors in case of payment defaults. However, the bankruptcy protection takes precedence over the lessors’ repossession requests.
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