Go First Insolvency: Lessors Lose Appeal At NCLAT

The National Company Law Appellate Tribunal dismissed the appeal by Go First's lessors against the admission of the airline to insolvency on Monday. The moratorium declared by the National Company Law Tribunal in the insolvency proceedings will now continue.

However, the appellate tribunal has allowed the lessors to approach the NCLT with an appropriate application under Section 65 of the Insolvency and Bankruptcy Code. Section 65 provides for a course of action to be taken against a company, when insolvency proceedings are filed with malicious intent.

The NCLAT has also allowed the lessors as well as the interim resolution professional to move to NCLT, to get a clear declaration about the aircraft and how their possession would be affected due to the moratorium.

The lessors had earlier placed before the court that they were not given a fair opportunity to be heard, before admitting the insolvency petition and neither were they given a chance to file an application under Section 65 of the Insolvency and Bankruptcy Code. They had alleged that the airline filed a voluntary insolvency application with the intent to hold on to the aircraft.

Go First had submitted that even if the airline initiated the proceedings to hold onto the aircraft, it was done to continue its day-to-day function and prevent the loss of jobs. Hence, the intention to file for voluntary insolvency was bona fide.

Go First approached the NCLT for voluntary proceedings on May 2 for the first time. It had claimed that this situation arose when its exclusive engine supplier, Pratt and Whitney, failed to supply functional engines to it.