NCLAT to hear SMBC Aviation Capital's plea challenging Go First's insolvency on May 12

Go First

The National Company Law Appellate Tribunal (NCLAT) deferred the hearing till May 12 in aircraft lessor SMBC Aviation Capital's challenge to National Company Law Tribunal (NCLT) allowing Go First's voluntary plea to initiate insolvency proceedings.

Arguing for SMBC aviation, senior advocate Arun Kathpalia stated that they had terminated their leases with Go First even before NCLT admitted the airline's voluntary insolvency plea. He submitted that there was no tearing for NCLT to admit the plea as Go First has itself stated in the plea that it had not defaulted in payments to financial creditors, while emphasising that the company law tribunal had not granted the lessors an opportunity to put forth their case.

The lessor said that Go First has no right over aircrafts and that the proceedings were initiated only to confuse issues and defeat its rights as a lessor of the aircraft.

SMBC argued that Go First got an resolution professional of their choice appointed and are now trying to take possession of aircraft that they do not own.

Even though the lessor pressed the appellate tribunal to grant an order of status quo, the tribunal did not pass any such order as the resolution professional has to be heard before any interim order is passed.

On May 10, the principal bench of the National Company Law Tribunal (NCLT) at Delhi admitted Go First's voluntary plea to initiate insolvency resolution process.

The tribunal appointed an interim resolution professional (IRP) while suspending the board and putting a moratorium on the debt-ridden airline's financial obligations.

The NCLT order said the former management would have to deposit Rs 5 crore towards expenses of IRP, who would have to keep the company running as a going concern. The management has been asked to extend all the assistance needed in keeping the airline afloat.

SMBC Aviation Capital, formerly RBS Aviation Capital, is one of the world's largest aircraft leasing companies.

On May 4 during the hearing at NCLT, several aircraft lessors opposed Go First's plea for voluntary insolvency.

Appearing for a group of aircraft lessors, senior advocate Arun Kathpalia argued that the interim moratorium was not an option under insolvency law. He submitted that the airline was asking the tribunal to pass orders that would affect entities whose side of the case had not been heard.

Kathpalia urged the tribunal to permit the lessors to file a statement of objections to Go First's plea. He argued that a moratorium would only increase the cost for the airline as it would have to pay charges for aircraft without utilising it. "How will an insolvency resolution professional chase Pratt & Whitney if the Wadia group can't do it?" he asked.

Founded by billionaire Nusli Wadia, Go First, earlier GoAir, filed for bankruptcy on May 2, blaming US engine maker Pratt & Whitney for the grounding of half of its fleet.

Rechristened Go First in May 2022, the airline that started flying in 2005 becomes the first Wadia Group entity to declare bankruptcy in its 287-year history and the third major airline to collapse since 2012 after Kingfisher Airlines and Jet Airways.

The Wadia Group-owned airline has liabilities worth around Rs 11,000 crore.

(This is a developing story, please come back for more)