Tag Archives: lessors

Delhi HC to hear Go First’s lessors’ plea on October 19

The Delhi High Court will hear aircraft leasing companies’ plea for deregistration of Go First aircraft on October 19.
With a favourable notification from the Ministry of Corporate Affairs, the lessors pressed for the release of the planes leased to Go First during a hearing on Thursday.

However, counsels of the airline’s committee of creditors and resolution professional sought time to examine the notification that was issued on Wednesday evening. The court accepted the plea and posted the matter for hearing on October 19.

The notification disallows moratorium for leased aircraft and that has come as a shot in the arm for lessors who are trying to recover the planes leased to Go First.

While lessors are seeking de-registration, Go First is expected to oppose the plea.

A senior Go First executive said the notification will not impact the airline. “Notifications are always prospective – as a rule,” he said.

 

Aviation Working Group downgrades India due to Go First crisis

Aviation Working Group (AWG) has further downgraded India as lessors have not been able to repossess their planes from Go First more than four months after the airline filed for insolvency.

The leasing cost stands as a prominent expense for Indian airlines. With AWG’s downgrade, it is likely that lessors will increase the aircraft leasing rates for Indian carriers, reports Deepak Patel for Business Standard.

AWG had first put India on its watchlist in May after the National Company Law Tribunal (NCLT) had barred the lessors from taking their planes back from Go First.

“The actions and inactions in the Go First insolvency proceedings are developments that materially and negatively implicate CTC (Cape Town Convention) non-compliance in India. India’s variable A score is projected to be materially reduced under the compliance index formula (from 3.5 to a projected 2). Further reductions are possible, given ongoing events,” AWG stated in its second watchlist issued on Monday.

In 2008, India signed the Cape Town Convention, an international treaty providing time-bound remedies for lessors to repossess planes, mitigating their risks. Lessors have been urging the Indian government to pass a parliamentary bill to implement this treaty, which will prioritise Cape Town Convention over insolvency laws.

AWG stated, “This projected variable A downgrade is necessary as gaps in Cape Town Convention primacy, notably in respect of bankruptcy legislation, have resulted in material non-compliance by India, with substantial losses to relying creditors.”

After Go First airline stopped operating flights from May 3, its lessors had put in applications with the Directorate General of Civil Aviation (DGCA) to repossess more than 40 of the airline’s 54 planes. However, the National Company Law Tribunal (NCLT) on May 10 put a moratorium on all Go First’s assets, barring the lessors from taking their planes back. Multiple lessors of Go First have filed an appeal in higher tribunals and courts to repossess the planes.

Nitin Sarin, MP, Sarin & Co, stated on Twitter that creditors, lessors and owners of aircraft leased to Go First have now been unable to repossess their aircraft for a period of over 130 days, far longer than as per India’s commitment under the Cape Town Convention.

“As a result, the Aviation Working Group has taken this step of issuing a second Watchlist Notice and further reducing India’s projected category to ‘low’ and projected score to 50 (from 63.5). Other airlines in India (who will be impacted by this in their own dealings) and we as an industry (as a whole) should be worried. The Government of India needs to find a solution to this and fast,” he added.

 

Delhi HG bars Go First from flying lessors’ aircraft

The Delhi High Court has said that scheduled maintenance cannot be considered as a reason to include flying of aircraft and restrained Go First to continue with maintenance flights.

In its judgement the High Court said that the resolution professional (RP) appointed under the insolvency law to manage the airline has not been able to show any urgency or grave imminent threat to led the aircraft to fly maintenance flights without any prior notice.
The orders for the Go First to maintain the status quo in respect of handling non-revenue flights of the petitioner lessor’s aircraft till further orders.

The high court termed as “misconceived” the contention of the RP that 2 of the 10 aircraft have been flown by Go Airlines as these were handling flights forming part of the scheduled maintenance activity for an aircraft.

“The respondent no.9/ RP of Go Airlines has also not been able to show any urgency or any grave imminent threat to these aircraft to suddenly and without any prior notice, compel the respondent no.9 RP to fly these aircraft.

“Prima facie, the term – scheduled maintenance cannot be understood to include flying the aircraft even if it is a non-commercial flight. Thus, respondent no.9/ RP of Go Airlines cannot be permitted at this stage, to continue with these handling/maintenance flights,” Justice Ganju said, reported PTI

NCLT allows Go First to use leased aircraft

The National Company Law Tribunal (NCLT) yesterday refused to restrain the resolution professional of Go First from using the aircraft leased to it by six leasing companies.

A bench of judicial member Mahendra Khandelwal and technical member Rahul Bhatnagar was approached by the aircraft leasing companies seeking an order to restrain Go First from commercially operating or flying the aircrafts owned by the lessors.

“It is pertinent to mention that the Directorate General of Civil Aviation (DGCA) has not deregistered the aircraft, which means that they are available to the Corporate Debtor for use to resume operations. As long as the aircraft/engines are registered, they can be used for operating or flying to keep the Corporate Debtor as a going concern within the safety norms prescribed by the regulator,” the order said.
The tribunal referred to its order of May 10 which admitted the company to insolvency proceedings on its own application and directed the interim resolution professional to keep the airline company as a going concern.

“Hence, the aircraft shall be with the airline company and shall be operated by it,” the order passed said.

The tribunal also did not allow the leasing companies to conduct inspections of their aircraft/engines.

“Allowing inspection would only act as an impediment to the effective discharge of the duties of the resolution professional which includes the protection and maintenance of the engines at the prescribed levels of efficiency/safety,” the tribunal said.

The tribunal directed the resolution professional to ensure that the property, engines and aircraft are maintained at the highest level of efficiency. (Source: Bar and Bench)

Go First to contest HC order allowing lessors to access the aircraft

Grounded carrier Go First is undergoing insolvency resolution proceedings, and its lessors have approached the Delhi High Court seeking directions to release the leased aircraft. The lessors claimed that Go First was in default of its rental payment obligations under the lease agreements.

On July 5, the Delhi High Court passed an interim order in favour of the lessors. The court ordered the Director General of Civil Aviation (DGCA) and the airports where the Go First aircraft are parked to allow the lessors to access their aircraft for inspections and maintenance work at regular intervals. The court also observed that the resolution professional appointed during the insolvency resolution proceedings is not required to take control of the aircraft.

In response to the Delhi High Court’s order, the Go First’s Resolution Professional (RP) is planning to contest the decision

Furthermore, the court noted that the lessors had the authority to seek deregistration of the aircraft without the consent of Go First. The lessors had approached the court against the DGCA for failing to deregister their aircraft, which the court considered as an administrative action against a government body. The court also stated that the National Company Law Tribunal (NCLT), where Go First’s insolvency resolution process was initiated, does not have the power to review judicial actions such as the deregistration of aircraft.

It is mentioned that on May 10, the NCLT accepted Go First’s voluntary plea to initiate an insolvency resolution process. The tribunal appointed an Insolvency Resolution Professional (IRP), suspended the board, and imposed a moratorium on the airline’s financial obligations. Subsequently, on May 22, the National Company Law Appellate Tribunal (NCLAT) upheld the NCLT’s order admitting Go First’s plea for insolvency.

 

Go First seeks direction from NCLT on leased aircraft

Crisis-hit Go First has sought various interim directions from the National Company Law Tribunal (NCLT), including restraining lessors from taking back aircraft and regulator DGCA from taking any adverse action against the airline.

The Wadia group-owned airline, which has liabilities worth INR 11,463 crore, has sought voluntary insolvency resolution proceedings and the plea is set to be heard by the Delhi bench of the NCLT on Thursday.

Go First has cancelled all its flights for three days starting from May 3. In its petition filed before NCLT. the budget airline has sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions. Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company. The airline also wants fuel suppliers to continue supply for aircraft operations and not terminate the present contractual arrangements.

Go First, which started flying more than 17 years ago, has said the non-supply of engines by Pratt & Whitney resulting in the grounding of more than half of its fleet has led to the current situation. The carrier has total liabilities of Rs 11.463 crore to all creditors, including a default of Rs 3,856 crore towards operational creditors. The dues towards aircraft lessors is Rs 2.600 crore, according to the plea filed before NCLT.

As on April 30, the debt exposure towards financial creditors stood at INR 6.521 crore. The airline’s net loss rose to Rs 3,600 crore last fiscal from INR 1,807.8 crore in 2021-22. The net loss was at INR 1,346.72 crore in 2020-21. Further, Go First has cited the example of Jet Airways, saying that lessors took swift re-possession of the planes leading to serious depletion of its asset value.

Citing Jet Airways, the Wadia group firm said prior to insolvency, it had a fleet size of 112 aircraft. However, after the insolvency was triggered against Jet Airways, it was left with only 11 aircraft, which significantly affected its prospects of resolution under IBC, said Go First. CIRP refers to Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC). Go First has a domestic market share of around 8 per cent. With Air India, AirAsia and SpiceJet already reeling under financial stress, if Go First is not resolved, then it will further monopolise the market leading to loss of consumers and all the stakeholders, it said. (Source: PTI)