In a major relief for Go First, the National Company Law Appellate Tribunal (NCLAT) upheld the National Company Law Tribunal (NCLT order granting a moratorium to the airline and refusing to allow lessors to take back possession of aircraft.
The NCLAT passed the order on petitions filed by three aircraft lessors against Go First’s voluntary insolvency resolution proceedings.
All three lessors have leased out around 21 aircraft to Go First. The airline has liabilities worth INR 114.63 and has sought voluntary insolvency resolution proceedings as well as an interim moratorium on its financial obligations.
On May 10, the principal bench of the NCLT appointed an interim resolution professional to look after the affairs of Go First and also suspended its board as part of the insolvency resolution process. It also directed IRP to maintain the status of the airline as a going concern.
Admitting Go First’s plea for voluntary insolvency, the NCLT also granted protection under a moratorium from recovery by lessors and lenders.
Go First had filed a plea for voluntary insolvency resolution proceedings before the NCLT. It filed its petition under Section 10 of the Insolvency and Bankruptcy Code to initiate insolvency against itself. The plea is different from Sections 7 and 9 where the financial and operational creditors, respectively, take the corporate debtor to the National Company Law Tribunal (NCLT) in case of default in payment of dues.
Meanwhile, the Directorate General of Civil Aviation (DGCA) has received at least 50 requests for repossessing in the last two weeks. The lessors were alarmed by their earlier experiences of Indian airlines turning bankrupt and lessors left fighting to get back their aircraft.
These rises from the previous experience of lessors in India that have seen the insolvency cases go on for weeks while the aircraft remains grounded gathering dust. Once the insolvency is filed the airlines get a moratorium of six months which can be extended for nine months and the wait extends on if or when the airline goes for liquidation.