Go First Airlines' Insolvency Proceedings Upheld by NCLAT; Aircraft Lessors Push for Possession

The National Company Law Appellate Tribunal (NCLAT) on Monday upheld an order passed by the National Company Law Tribunal (NCLT) which had admitted an application by Go First Airlines seeking initiation of voluntary insolvency proceedings.

This ruling was made by a coram of Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra.

The decision was made in response to a plea filed by lessors of aircrafts of Go First Airlines who were seeking possession of the aircrafts. 

The lessors, SMBC Aviation Capital Ltd, GY Aviation and SFV Aircraft Holdings, had argued that the aircraft lease had terminated before the moratorium was granted and hence the moratorium could not impose a freeze on third-party assets.

The NCLAT, however, asked the appellants to approach the adjudicating authority for any further relief. It stated that the appellants and the IRP (Interim Resolution Professional) were at liberty to make appropriate applications before the Adjudicating Authority for declaration with regard to applicability of the moratorium on the aircrafts with regard to which Leases in favour of the Corporate Applicant were terminated prior to admission of Section 10 Application. 

The NCLAT also stated that the appellants and the IRP were free to make an appropriate Application under Section 60, sub-section (5) with regard to claim of possession and other respective claims of both the parties relating to the aircrafts in question.

Go Airlines had moved the NCLT earlier this month to initiate the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC). 

The company had claimed that due to faulty engines supplied by American company Pratt & Whitney (P&W), the grounding of its aircrafts increased from 31% in 2020 to more than 50% in April 2023. This had resulted in a loss of over ₹10,800 crore. 

The NCLT Delhi on May 10 admitted the plea and declared full moratorium for the company. It also directed the company’s suspended board of directors to co-operate with the IRP to ensure there are no layoffs.