Assets worth Rs 1,500 crore stuck with Go First after moratorium, aircraft lessor tells NCLAT

The judgment in all the pleas by the lessors against Go First's moratorium is expected to be pronounced on May 22 (Monday).

Aircraft lessor ACG Aircraft Leasing Ireland Ltd told National Company Law Appellate Tribunal (NCLAT) on May 19 that its assets worth Rs 1,500 crore is stuck with Go First after the order of moratorium was passed by the National Company Law Tribunal (NCLT) on May 10.

The lessor, who had terminated its leases with Go First on May 2, argued it is exempted from the morotorium and asked the appellate tribunal to pass an order clarifying the same. ACG Aircraft leasing further argued that Go First is holding their assets despite the termination of lease, which is illegal as per law.

According to ACG Aircraft Leasing, Go First has been defaulting  in payments to them since 2020, but they did not initiate any proceedings out of goodwill.

However, they are now constrained to approach the courts after the airline filed for voluntary insolvency.

Responding to the aircraft lessor's allegation, Go First argued that they should have approached the NCLT seeking a clarification rather than filing an appeal against the order granting moratorium. It is Go First's contention that ACG Aircraft’s email terminating the lease came only after the airline announced its plans for insolvency. Go First further alleged that all the lessors were terminated after the announcement as they are a part of the Aviation Working Group (AWG). AWG is a not-for-profit legal entity comprised of major aviation manufacturers, leasing companies, and financial institutions that contribute to the development of policies, laws and regulations that facilitate advanced international aviation financing and leasing.

The NCLAT, after hearing the arguments of both sides, reserved the case for judgments. The judgment in all the pleas by the lessors is expected to be pronounced on May 22 (Monday).

On May 15, the NCLAT reserved judgement on plea by aircraft lessors challenging the order of National Company Law Tribunal (NCLT) admitting Go First's plea for voluntary insolvency.

Aircraft lessors, including SMBC aviation capital, have challenged the order of NCLT, admitting the airline's plea for insolvency.

On May 12, the lessors argued that that the cash-strapped airline is using the insolvency proceedings to hold on to aircraft that it does not own.
SMBC called into question the rationale behind the Go First filing for voluntary insolvency despite having 26 functional aircraft and taking bookings for future dates.

SMBC Aviation claimed it has unpaid dues of Rs 700-800 crore from Go First. SMBC further argued that the National Company Law Tribunal (NCLT) did not provide them with an opportunity to present their side of the case and admitted Go First's plea for insolvency without ascertaining the entire situation.

GV Aviation argued that Go First is trying to create rights for itself in relation to the aircraft using the insolvency proceedings and diffuse rights of aircraft lessors.

SFV Aircraft Holdings argued that the Director General of Civil Aviation (DGCA) has told the lessors that the aircraft cannot be deregistered owing to the moratorium.

Background

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.

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.

The ultra-low-cost airline has liabilities worth around Rs 11,000 crore.