Aircraft lessors challenged the order of the National Company Law Tribunal (NCLT), Delhi admitting the cash-strapped airline’s plea for voluntary insolvency.
At the start of the argument, the bench of Chairperson Justice Ashok Bhushan and Member(Technical) Barun Mitra asked Senior Advocate Maninder Singh, appearing for Go First, “What is of the hearing? Either we interfere or we don’t interfere (with the NCLT order).”
On the other hand, the counsel for Interim Resolution Professional (IRP) said that the lessors of the airline terminated their leases after Go First announced its plans to declare insolvency. He said that as per the Civil Aviation Requirements, the Corporate Debtor (in this case Go First) is responsible for flight operations, including maintenance. “The termination was to defeat the purpose of the Insolvency and Bankruptcy Code (IBC).
He said it was the duty of the IRP to look after the airlines. “If allowed to operate, 80 engines (from Pratt & Whitney) will change the fortunes of the company,” he said.
An IRP is a professional who is the whole and sole of the firm after the insolvency application is admitted.
The airline had told the NCLT that it had won an arbitral award in Singapore against Pratt & Whitney (P&W), directing P&W to supply 10 serviceable engines by April 27 this year and 10 serviceable engines each month till December 2023.
He also questioned the intentions of the lessors, arguing that the lessors had not terminated the leases when the dues to them increased, but they terminated the leases immediately after the airline announced insolvency plans.
Meanwhile, Senior Advocate Arun Kathpalia, appearing for SMBC Aviation Capital, said that Go First’s insolvency application should not have been admitted by the NCLT, Delhi on the first day itself. He said it was a ‘brutal denial of opportunity for the lessors to not allow them to file their objections in the case’.
The lessors also said that Go First created a ‘sense of false urgency’ by suddenly halting its operations and approaching the NCLT for insolvency, even when the aircraft were flying.
Replying to this, Kathpalia said, “I terminate the leases for my aircraft, he wants to hang on to them. Is it not malicious?”
When the Jet Airways case was brought up, he said that in the case of Jet Airways, it was a financial lease, meaning that Jet owned the assets.
NCLT on May 10 accepted Go First’s insolvency plea, resulting in the airline being put under moratorium as per the IBC.
SMBC Aviation Capital, SFV Aircraft Holdings, and GY Aviation Lease moved the appellate tribunal after NCLT accepted Go First’s insolvency plea.
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