India's National Company Law Appellate Tribunal (NCLAT) has denied an application by several aircraft lessors to overturn insolvency proceedings preventing them from repossessing aircraft from Go First (Mumbai International).

The low-cost carrier had voluntarily filed for insolvency with the National Company Law Tribunal (NCLT) earlier this month after suspending all flights on May 2. The supervised process prevents secured creditors from seizing assets and pauses any legal action for payment defaults.

Lessors SMBC Aviation Capital, SFV Aircraft Holdings, GY Aviation Lease, and Engine Lease Finance appealed against the NCLT decision, with SMBC saying during the appeal that the decision to voluntarily apply for insolvency protection was "malicious" and a "smokescreen." But on May 21, NCLAT Justices Ashok Bhushan and Barun Mitra dismissed the lessors' appeal.

The lessors argued that they had cancelled the aircraft leases before the NCLT accepted Go First's insolvency application, meaning their attempts to re-possess their planes should not be held up. However, the appellate tribunal said the lessors could take their arguments back to the NCLT to determine whether they could take back aircraft the leases of which were cancelled before the insolvency order took effect. In addition, they were told to ask the NCLT to decide on other aircraft re-possession claims, and to determine whether Go First's insolvency application was malicious. Some lessors are believed to be considering this option.

Meanwhile, India's Financial Times is reporting that Indian airlines may find it harder to access bank loans following the Go First insolvency. The airline is the second major India-based carrier to become insolvent within four years, with Jet Airways (Mumbai International) also ceasing operations in April 2019. Eleven years ago, Kingfisher Airlines (Mumbai International) collapsed owing around INR70 billion (USD850 million) to 17 banks. The failures are reportedly seen as "denting" the credit worthiness of the entire Indian aviation industry. Since filing for insolvency, Go First has defaulted on an interest payment of INR110 million rupees (USD1.3 million), and the Central Bank of India (a public sector bank rather than the actual central bank of India) said its exposure to the airline was INR13.05 billion (USD157.5 million).