India's National Company Law Tribunal (NCLT) has dismissed the objections of lessors and said insolvent Go First (Mumbai International) can continue to operate test flights using their aircraft. In addition, a ruling from the July 26 hearing prevents the lessors or their agents from gaining access to the aircraft for inspection and maintenance purposes.
Last week, ch-aviation reported that lessors wanted to repossess all 54 aircraft placed at Go First. The low-cost carrier suspended flights in early May, applied for voluntary administration, and is now attempting to recapitalise to relaunch, albeit as a leaner operation. However, to do this, Go First needs to retain aircraft, and so far, benefitting from NCLT rulings preventing lessors from repossessing their planes, has managed to do so.
Go First also says that it needs to keep the aircraft in good order to relaunch, which involves some flying. As also reported by ch-aviation, on July 25, Go First took an A320-200N, VT-WGD (msn 7205) and belonging to SMBC Aviation Capital, up for a 40-minute test flight and has since operated further flights.
Two days later, an entity associated with SMBC Aviation Capital was one of six petitioners seeking to prevent Go First from using their aircraft. Counsel for SMBC Aero Engine Lease, alongside Bluesky 31 Leasing Co. Ltd, Bluesky 19 Leasing Co. Ltd (special purposes vehicles owned by Minsheng Financial Leasing), Jackson Square Aviation, Engine Lease Finance, and BOC Aviation (Ireland) appeared last week before Justices Mahendra Khandelwa and Rahul Prasad Bhatnagar, sitting on the NCLT's Delhi bench.
Neeraj Kishan Kaul, appearing for Go First and its resolution professional, Shailendra Ajmera, argued that the carrier needed to retain operating rights if it was to restart, saying not having it amounted to the "corporate death of the corporate debtor." He said the aircraft had not been de-registered and were therefore available for use. Kaul said granting lessors or their agents access to the aircraft while on the apron would be "an impediment to the effective discharge of the duties of the resolution professional," who was under orders to keep the aircraft airworthy.
The NCLT agreed. In rejecting the lessors' petition, the tribunal's ruling said, "as long as the aircraft/engines are registered, they can be used for operating or flying to keep the corporate debtor as a going concern within the safety norms prescribed by the regulator. To keep the corporate debtor as a going concern, the aircraft have to be flown. Hence, the aircraft shall be with the corporate debtor and shall be operated by the corporate debtor. Therefore, we see no reason to allow this interim relief claimed by the applicants. Allowing inspection would only act as an impediment to the effective discharge of the duties of the resolution professional, which includes the protection and maintenance of the engines at the prescribed levels of efficiency/safety."
In early July, ch-aviation reported that the High Court of Delhi had granted SMBC Aviation Capital, Aviation Capital Group, CDB Aviation, DAE Capital, SKY Leasing, Merx Aviation Finance, and Carlyle Group inspection and maintenance access to their parked aircraft placed at Go First. The airline's resolution professional appealed that decision almost immediately, saying that the NCLT and its appellate tribunal have exclusive jurisdiction regarding insolvency when entities have entered into the corporate insolvency resolution process.
India's Directorate General of Civil Aviation (DGCA) recently approved Go First's relaunch plan, subject to certain conditions. Under the plan, the airline proposes to restart using 15 aircraft to service 114 daily flights to eight airports. While key creditors and lenders, the Bank of Baroda and the Central Bank of India, have reportedly agreed to lend INR4.5 billion Indian rupees (USD55 million) for initial working capital purposes, funds are yet to land in the airline's bank accounts and India-based media outlets say the grounded airline is now seeking as much as INR7 billion (USD85 million) to relaunch, creating some hesitancy among the lenders.
