NEW DELHI: Lessors will not be able to repossess their aircraft from Go first currently. The National Company Law Court of Appeal (NCLAT) on Monday upheld the National Company Law Tribunal’s (NCLT) May 10 order allowing the Wadia Group airline’s application to enter voluntary insolvency proceedings. Thus the bankrupt airline obtained protection from taking away assets in its possession such as aircraft and airport slots under the provisions of the Bankruptcy and bankruptcy code (IBC) for a period of between six months and one year.
Offended by this order, some landlords including GY Aviation Lease and SMBC Aviation Capital had transferred NCLAT as they wanted to repossess their aircraft. While upholding the NCLT’s May 10 order, NCLAT dismissed the landlords’ petition and asked them to appeal before the NCLT.
Abhilash Lal of Alvarez & Marsal, who has been appointed interim resolution professional (IRP), can proceed with the insolvency resolution process. Landlords can apply to the Supreme Court for compensation.
Although India is a signatory to the Cape Town Convention (CTC) which allows lessors to repossess aircraft from a defaulting/defunct airline, it has yet to be fully implemented here. In October 2018 the aviation ministry had asked for comments on the CTC Bill 2018 to implement the treaty signed in 2008 to basically give lessors assurances that their expensive assets like aircraft and engines would not get stuck here when Indian carriers fail to pay their leases or went belly up.
However, the move has stalled ever since. And because of that, IBC takes precedence over CTC, as it became evident in the Go First case.
When Jet Airways closed in 2019, the Boeing 737s it leases and its airport slots were filled by other Indian carriers. It went into insolvency long after the assets were repossessed by the lessors. However, Go First filed for insolvency on May 2, suspended operations the next day, and filed for insolvency on May 10.
The lessors have applied to repossess 45 of Go First’s 54 aircraft in this interim period before the admission of insolvency, under the irrevocable cancellation and export application authorizations (IDERA), in which the DGCA must decide on such cases within five working days. But before the deadline of five working days the insolvency of Go First was admitted and the DGCA was unable to act subsequently.
Aircraft leasing regulator AWG issued a “watch list notice” for India on May 12 after lessors could not repossess 45 of Go First’s 54 “insolvent” aircraft. He warned that this case “would have a direct and material impact on future financing and leases of Indian airlines”.
The Aviation Working Group (AWG) is a non-profit body co-chaired by Airbus and Boeing and includes the world’s largest aviation manufacturers, leasing companies and financial institutions.
Offended by this order, some landlords including GY Aviation Lease and SMBC Aviation Capital had transferred NCLAT as they wanted to repossess their aircraft. While upholding the NCLT’s May 10 order, NCLAT dismissed the landlords’ petition and asked them to appeal before the NCLT.
Abhilash Lal of Alvarez & Marsal, who has been appointed interim resolution professional (IRP), can proceed with the insolvency resolution process. Landlords can apply to the Supreme Court for compensation.
Although India is a signatory to the Cape Town Convention (CTC) which allows lessors to repossess aircraft from a defaulting/defunct airline, it has yet to be fully implemented here. In October 2018 the aviation ministry had asked for comments on the CTC Bill 2018 to implement the treaty signed in 2008 to basically give lessors assurances that their expensive assets like aircraft and engines would not get stuck here when Indian carriers fail to pay their leases or went belly up.
However, the move has stalled ever since. And because of that, IBC takes precedence over CTC, as it became evident in the Go First case.
When Jet Airways closed in 2019, the Boeing 737s it leases and its airport slots were filled by other Indian carriers. It went into insolvency long after the assets were repossessed by the lessors. However, Go First filed for insolvency on May 2, suspended operations the next day, and filed for insolvency on May 10.
The lessors have applied to repossess 45 of Go First’s 54 aircraft in this interim period before the admission of insolvency, under the irrevocable cancellation and export application authorizations (IDERA), in which the DGCA must decide on such cases within five working days. But before the deadline of five working days the insolvency of Go First was admitted and the DGCA was unable to act subsequently.
Aircraft leasing regulator AWG issued a “watch list notice” for India on May 12 after lessors could not repossess 45 of Go First’s 54 “insolvent” aircraft. He warned that this case “would have a direct and material impact on future financing and leases of Indian airlines”.
The Aviation Working Group (AWG) is a non-profit body co-chaired by Airbus and Boeing and includes the world’s largest aviation manufacturers, leasing companies and financial institutions.
