In a significant setback for aircraft lessors, the National Company Law Appellate Tribunal (NCLAT) has upheld the insolvency proceedings against financially struggling airline Go First.
The decision comes as a blow to the lessors who had challenged the ruling issued by the National Company Law Tribunal (NCLT), which granted bankruptcy protection to Go First.
Prominent aircraft lessors, including GY Aviation Lease, SFV Aircraft Holdings, and SMBC Aviation Capital, among others, had approached the NCLAT to contest the NCLT’s decision.
Unfortunately for them, this means they will not be able to reclaim the leased planes from the troubled airline.
The lessors had previously voiced concerns that Go First was exploiting the bankruptcy plea to retain possession of aircraft that it does not own.
SMBC, a leading global aircraft leasing company, raised questions about why Go First had initiated insolvency proceedings despite having 26 operational aircraft.
The outstanding debt owed by Go First to SMBC is estimated to be around Rs 700-800 crore.
Furthermore, the lessors argued that they had already terminated the leases with Go First prior to the NCLT’s admission of the airline’s insolvency plea and the subsequent imposition of a moratorium.
SMBC emphasized that once the lease is terminated, Go First should not be allowed to operate the aircraft.
The NCLAT has stated that it will be up to the NCLT to decide whether the lessors who terminated their leases prior to the commencement of the bankruptcy proceedings can reclaim their aircraft.
On the other hand, the ruling brings some relief to Go First, as the airline is currently under pressure to resume its operations, which have been suspended until May 26.
Go First filed for bankruptcy protection on May 2, citing a severe cash crunch, for which it placed the blame on US engine manufacturer Pratt & Whitney (P&W).
The airline has asserted that it sought voluntary insolvency to safeguard its employees and that there were no malicious intentions behind the decision.
