Go First Insolvency Upheld By Tribunal, Setback For Lessors
NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) on Monday upheld insolvency resolution proceedings against crisis-hit airline Go First, derailing aircraft lessors' efforts to take back their planes from the struggling Wadia group firm.
A two-member NCLAT bench directed aircraft lessors and the Interim Resolution Professional (IRP) of the Wadia group firm to approach the National Company Law Tribunal (NCLT) regarding the claim of possession and other respective claims relating to the aircraft whose leases were terminated by the lessors after the company filed for insolvency process.
"The order dated May 10, 2023, admitting Section 10 Application is upheld," said the NCLAT bench headed by Chairperson Justice Ashok Bhushan.
Earlier, NCLT on May 10, 2023, admitted the plea of Go First to initiate voluntary insolvency resolution proceedings and appointed an interim resolution professional (IRP) to suspend the company's board.
The said NCLT order was challenged by Go First's four aircraft lessors - SMBC Aviation Capital Ltd, GY Aviation, SFV Aircraft Holdings and Engine Leasing Finance BV (ELFC) - owning around 22 aeroplanes.
Disposing of their pleas through a 40-page-long common order, the NCLAT said lessors are at "liberty to file" appropriate application before NCLT under Section 65 of the Insolvency & Bankruptcy Code (IBC) with "appropriate pleadings and material" regarding their claims.
However, it also added that NCLT while considering the said application "shall not be influenced by any observations made in this order".
"The appellants, as well as IRP, are at liberty to make appropriate Application before the Adjudicating Authority (NCLT) for declaration with regard to the applicability of the moratorium on the aircraft with regard to which Leases in favour of the Corporate Applicant (Go First) were terminated prior to admission of Section 10 Application, which Application needs to be considered and decided by the Adjudicating Authority in accordance with law," it said.
NCLAT also held lessors and IRP are at liberty to make an appropriate application under Section 60, sub-section (5) with regard to claims of possession and other respective claims relating to the aircraft in question, which need to be decided by the NCLT in accordance with the law.
Section 10 of IBC allows a company to approach NCLT for initiation of insolvency a f t e r default.
While section 60 (5) grants NCLT power to entertain any claim made by or against the corporate debtor including claims by or against any of its subsidiaries. It also grants NCLT power to deal any question of priorities or any question of law or facts, arising out of CIRP.
Over aircraft lessors' contention that leases with Go First were terminated prior to admission of Section 10 and moratorium as directed by NCLT order dated May 10, 2023, cannot be said to be applicable to these assets are free to claim possession, the appellate tribunal said: "the issues which are sought to be raised in this appeal have not yet been considered by the Adjudicating Authority".