Go First Crisis: NCLAT Upholds Insolvency Order, Asks Lessors To Move To NCLT

The lessors argued at the NCLAT that Go First is using the insolvency proceedings to hold on to aircraft that it does not own

Go First has stopped flying from May 3 due to financial losses as a result of persistent issues with engines from US firm Pratt & Whitney, which powers its Airbus A320 neo aircraft.

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The National Company Law Appellate Tribunal (NCLAT) on Monday upheld the National Company Law Tribunal (NCLT) order on Go First insolvency. The lessors have been asked to move an appropriate application at the NCLT.

The NCLAT, while disposing of lessors’ petition and asking them to file an appeal before the NCLT (National Company Law Tribunal), said the IRP (Interim Resolution Professional) is allowed to proceed with the insolvency resolution process.

Go First insolvency matter | NCLAT (National Company Law Appellate Tribunal) upholds NCLT's 10th May insolvency order. It disposes of lessors’ petition and asks them to file an appeal before the NCLT (National Company Law Tribunal). IRP (Interim Resolution Professional) allowed… pic.twitter.com/Gcynm1Yq3I

— ANI (@ANI) May 22, 2023

The aircraft lessors to Go First, such as SMBC aviation capital, SFV aircraft holdings and GY Aviation Lease, challenged the order of National Company Law Tribunal (NCLT) admitting the cash strapped airline's plea for insolvency. The lessors argued at the NCLAT that Go First is using the insolvency proceedings to hold on to aircraft that it does not own.

Aircraft lessor 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 that 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.

The aircraft lessor argued that they had already terminated the leases before the NCLT-ordered moratorium, however, they are not able to obtain possession of aircraft owing to the tribunal's order. Citing aviation rules, the leasing company argued that Go First cannot operate aircraft once the lease is terminated.

Cash-strapped Go First on last Thursday announced that it had cancelled all flights until May 26. In a statement, Go First said it hoped to resume bookings shortly.

The airline has stopped flying from May 3 due to financial losses as a result of persistent issues with engines from US firm Pratt & Whitney (P&W), which powers its Airbus A320 neo aircraft.

The airline has liabilities worth Rs 11,463 crore. The budget airline started domestic operations in India in 2005-06, with the first flight from Mumbai to Ahmedabad. International operations were launched in 2018-19. The airline operates around 180-185 flights daily.