Delhi High Court Defers Go First Hearing Amid Insolvency Code Amendments

The Delhi High Court on Thursday deferred the Go First hearing to mid-October in the wake of the new Insolvency and Bankruptcy Code amendments that came on Wednesday.

The court was considering the request made by the lessors, who were seeking a directive for the Directorate General of Civil Aviation to initiate the deregistration of the aircraft leased to Go First. These lessors include Accipiter Holdings DAC, Pembroke Aircraft Leasing Holdings Ltd., SFV Aircraft Holdings, ACG Aircraft Leasing Ireland Ltd., EOS Aviation 12, SMBC Aviation Capital Ltd., and DAE SY 22 13 Ireland, among others.

Recent amendments to the insolvency code have eliminated the obstacle that lessors previously encountered when attempting to repossess aircraft from insolvent airlines.

As per a government notification, the new amendment to the Insolvency and Bankruptcy Code, 2016, grants an exemption from the moratorium for transactions, arrangements, or agreements involving aircraft, aircraft engines, airframes, and helicopters.

In the Indian context of the Insolvency and Bankruptcy Code, a "moratorium" signifies a legally mandated period during which creditors are forbidden from pursuing legal actions to collect debts from a debtor undergoing a corporate insolvency resolution process.

The National Company Law Tribunal had allowed a Go First lessor, Bluesky 19 Leasing Co., to inspect aircraft. The plea was disposed of after giving this relief, as the matter is still pending before the NCLT. This is also the third instance where the NCLAT has given such relief to a lessor in the Go First case, after providing the same to Engine Lease Finance BV and Jackson Square Aviation LLC.

The position of lessors at the NCLT remains that the grounded airline does not have any right to possess the leased aircraft, as the agreements with lessors were terminated before the moratorium was declared.