Go First case: RP raises questions on timing of lease termination by lessors

Go First filed for voluntary insolvency on May 2.

Senior Advocate Ramji Srinivasan, who appeared for the Resolution Professional (RP) of the grounded airline Go First, on September 12 alleged that the aircraft and engine lessors had terminated their leases only after knowing that the airline was filing a plea for voluntary insolvency resolution process.

Arguing at the National Company Law Tribunal (NCLT), Srinivasan noted that Go First had received communications terminating the leases after May 2, the date on which the airline announced its plan to enter insolvency. He therefore questioned the intent of the lessors in terminating the leases at this time, despite being aware of the airline's financial situation much before it announced its plan to file for insolvency.

Srinivasan made these arguments while NCLT was hearing a bunch of applications by Go First's aircraft and engine lessors asking to be exempted from the moratorium since they terminated the leases before the moratorium kicked in on May 10.

Engine lessors SMBC and Engine Lease Finance BV made their arguments today. According to them, the moratorium does not apply to them since they had sent demand notices under the Insolvency and Bankruptcy Code, 2016 much before the airline filed for insolvency.

Engine Lease Finance BV argued that out of the four engines that it had leased to Go First, two had to undergo extensive repairs before they could be used on aircraft. According to the Engine lessor, these engines have to be taken abroad to be repaired.

After hearing the case for some time, the NCLT adjourned it to September 22 for further consideration.

Go First at NCLT:

Founded by billionaire Nusli Wadia, low-cost airline Go First, earlier GoAir, filed for voluntary insolvency on May 2 blaming engine maker Pratt and Whitney for its troubles.

On May 10, the principal bench of NCLT at Delhi admitted Go First's voluntary plea to initiate an insolvency resolution process.

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