NCLAT upholds Go First bankruptcy proceedings in a setback to lessors

The National Company Law Appellate Tribunal on Monday upheld the insolvency proceedings against cash-strapped airline Go First in a setback to efforts of its lessors to repossess their aircraft.

Go First's lessors also include SMBC Aviation Capital and CDB Aviation's GY Aviation Leasing.

Upholding the NCLT's May 10 order, the appeals tribunal disposed of the lessors’ petition and asks them to file an appeal before the NCLT. The IRP (Interim Resolution Professional) is allowed to proceed with the insolvency resolution process.

The low-cost carrier, recently rebranded as Go First, was plunged into financial crisis this year, sparked by what it called "faulty" Pratt & Whitney engines that grounded about half its 54 Airbus A320neos.

The airline, which had a 7% share of the world's third largest aviation market in March, has currently suspended all flights due to "operational reasons" and is not taking new bookings.

In granting bankruptcy protection, the National Company Law Tribunal in New Delhi ordered a moratorium on Go First's assets and leases and appointed Abhilash Lal of Alvarez & Marsal as the interim resolution professional to take over management with immediate effect.

The bankruptcy move adds to headaches for lessors, which have filed requests with India's aviation regulator for the return of about 40 Go First planes after rental payments were missed.

India made it easier for lessors to take back planes if airlines default on payments after joining an international treaty known as the Cape Town Convention in 2008. But bankruptcy protection supersedes lessors' repossession requests.

(With agency inputs. More to come)