NCLAT clears path for Engine Lease Finance to inspect Go First airlines' engines

The National Company Law Appellate Tribunal (NCLAT) has authorised Engine Lease Finance BV to conduct an inspection of its four jet engines currently held by Go First Airlines. The tribunal ruling modifies the earlier judgement by the National Company Law Tribunal (NCLT) on July 26.

Engine Lease Finance (ELF), a key player in engine financing and leasing, had contested NCLT's decision in a bid to regain control of the engines. However, the Delhi bench had rejected ELF's plea, asserting that maintenance fell under the responsibility of Go First's resolution professional during the corporate insolvency resolution process.

Ten-day inspection window

The NCLAT's recent verdict now requires Go First's resolution professional to facilitate ELF's engine inspection within the next 10 days. The directive came from the NCLAT bench, presided over by Chairperson Justice Ashok Bhushan and Barun Mitra.

While NCLT had previously denied other lessors' requests to reclaim leased planes from Go First, NCLAT differed in its stance. It deemed the NCLT's refusal of inspection unnecessary. Furthermore, NCLAT prompted NCLT to promptly address similar pleas from other Go First lessors.

Risk of 'corporate death'

The NCLT's earlier ruling had underscored the critical role of aircraft and engines in Go First's business operations. The NCLT emphasised that their removal could lead to the airline's "corporate death," considering the assets were under Go First's physical control.

The imposition of a moratorium further barred lessors from retrieving aircraft and engines from the corporate debtor, as explained in the NCLT's comprehensive 29-page order. Go First, which halted operations on May 3rd, had its voluntary insolvency resolution proceedings approved by the NCLT on May 10th.

ELF's pursuit to inspect the engines marks a step forward, shaping the evolving landscape of lessor rights and the intricate dynamics of resuscitating financially distressed airlines. As the corporate insolvency resolution process unfolds, this case holds broader implications for the aviation industry.