Lessors Oppose Go First's Insolvency Plea
Go First said that it has been forced to cancel over 4,000 flights in the last month.
The National Company Law Tribunal on Thursday reserved its order in the insolvency application filed by low-cost carrier, Go First.
In a voluntary insolvency application before the tribunal, Go First has stated that in the last 30 days, the airline has been forced to cancel over 4,000 flights.
The best thing for the aviation industry in a matter like this would be a revival, said Senior Advocate Neeraj Kishan Kaul while appearing for the airline. Kaul informed the court that the 26 functioning aircraft can carry the airline for now and that it'll be able to pay employee salaries as long as these aircraft are operational.
The requirements for a voluntary insolvency application have been fulfilled, Kaul said, adding that an interim moratorium must be granted to the airline. Go First’s only assets are its aircraft, and if an interim moratorium is not conducted, the aircraft would be seized and the lessors would take steps that would harm the airline, he said.
"The petition has shown all requirements for an interim moratorium, which are essential at this stage, and any malicious intent can be objected to at later stages. The petition meets all procedural and other requirements under the Insolvency and Bankruptcy Code, 2016," Kaul said.
A voluntary insolvency application under IBC must be supported by a special resolution passed by the shareholders of the company.
Go First filed an application for voluntary insolvency resolution proceedings before the NCLT on Tuesday. Go First has attributed its insolvent state to Pratt & Whitney’s "defective and failing engines." The percentage of grounded aircraft due to Pratt & Whitney’s faulty engines has grown from 7% in December 2019 to 31% in December 2020 to 50% in December 2022, the airline said in a media statement.
The U.S.-based engine maker has refused to comply with an award issued by a Singapore-based emergency arbitrator, directing it to supply "without delay" 10 spare leased engines per month until December 2023, Go First has said.
Objecting to Go First's insolvency application are the airline's lessors, namely SMBC Capital Aviation, GAL, CDB Aviation, Sonoran Aviation Company, and MSPL Aviation.
Arguing for the lessors, senior advocate Arun Kathpalia said that the principle of an interim moratorium does not apply in this case, as such a step would stop lessors from taking any steps against the airline. "Such a step would stop third parties who are not present before the bench to take any steps against the airline", he stated.