Go First's resolution professional questions lessor's lease termination timing

Go First NCLT case: Senior Advocate Ramji Srinivasan, representing the Resolution Professional (RP) of Go First, alleged on September 12 that the aircraft and engine lessors terminated their leases only after they became aware of the airline's intention to file for voluntary insolvency resolution proceedings.

The National Company Law Tribunal (NCLT) on Tuesday addressed a series of applications from Go First's aircraft and engine lessors who sought exemption from the moratorium, claiming they had terminated the leases before the moratorium came into effect on May 10.

Report on maintenance of aircraft and engines

An Irish aircraft lessor requested that Go First replace missing parts from its leased aircraft and permit continuous security personnel to protect the grounded planes in an attempt to recover its Airbus fleet on September 6.

On September 1, the NCLT instructed the Resolution Professional (RP) overseeing the grounded airline Go First to provide a report on the upkeep of leased fleet and engines. The directive followed a complaint from a lessor who claimed that certain components of their leased equipment had disappeared.

The lessor said that they had conducted an inspection both prior to the airline's insolvency proceedings and recently, and discovered missing parts both times. They said that the RP was not adhering to NCLT's prior instructions regarding the maintenance of the fleet and engines. The lessor also expressed concern about potential substantial financial losses, given the high value of the fleet and engines, which amount to millions of US Dollars.

During the proceedings, the Committee of Creditors (CoC) sought to intervene in the case. However, the lessors opposed this, alleging it was an attempt to disrupt their case. 

What are the claims by lessors? 

The lessors have consistently claimed that the RP has not properly maintained the fleet and fulfilled the responsibilities. In response, the RP has accused the lessors of involving the airline in various legal proceedings.

Two lessors, Jackson Square Aviation Ireland Ltd and Engine Lease Finance BV, had previously moved the National Company Law Appellate Tribunal (NCLAT) against the NCLT order from July 26, securing the right to inspect their engines and aircraft.

Furthermore, ACG Aircraft Leasing, an Ireland-based lessor for Go First, informed the court that critical aircraft components, such as fan blades, escape slides, and other vital parts, were missing from at least two aircraft. They provided evidence of these missing items in a non-public filing.

SMBC, the second-largest aircraft lessor globally, cautioned in May that India's prohibition on leasing companies repossessing Go First's planes would have a disruptive impact on the aviation market and could lead to a crisis of confidence.

Deregistration of grounded aircraft 

The case regarding the deregistration of the grounded aircraft, filed by the lessors, is ongoing in the Delhi High Court's single bench. Despite approvals from the Directorate General of Civil Aviation (DGCA), Go First's RP, Shailendra Ajmera, has faced challenges in raising funds due to a Delhi High Court order.

Go First, owned by the Wadia Group, filed for insolvency due to financial difficulties linked to issues with Pratt and Whitney's engines. NCLT admitted the case on May 10, leading to the suspension of the board and a moratorium on the airline's financial obligations.

The moratorium prompted several Go First aircraft lessors to take legal action, seeking the deregistration of leased aircraft. Despite their efforts, the NCLAT rejected their plea to stay NCLT proceedings, leading to further litigation in the Delhi High Court.

Go First has expressed its intention to restart its operations and secure investment, but its functions are currently on hold.