The Delhi High Court's recent judgement allowing lessors to deregister and reclaim Go First's 54 aircraft has created more questions than answers regarding the now-defunct airline. The judgement comes close to the National Company Law Tribunal, or NCLT, granting another extension to complete the insolvency process.
Bidders like Safrik and Sky One from Sharjah prompted the extension. Additionally, a joint bid by Ajay Singh of SpiceJet and Busy Bee Airways, owned by Nishant Pitti, is also under consideration.
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A key question is whether the high court ruling will have an impact on the insolvency process, especially now that the airline's primary asset, the aircraft, is returnable to the lessors? Without the aircraft, the airline has limited assets that lenders can sell to settle outstanding debt, potentially disrupting the ongoing bankruptcy proceedings.
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The aircraft can also be procured from other companies. If the bidders choose to retain them, they will have to bear the cost. Therefore, according to Mukesh Chand, partner at Economic Laws Practice, the ruling may not significantly impact the insolvency process.
Pitti took to Twitter on behalf of Busy Bee Airways after the judgement was announced, stating that the company would review the judgment and then assess what adjustments are required to its offer to Go First.
Manmeet Singh, partner at Saraf and Partners, shed more light on the situation by explaining that the airline's offers, which may have been based on certain assumptions, could now change as a result of the judgment's complete alteration of those assumptions.
However, there are other important assets with the airline such as brand, operating permits, landing slots, and scheduling slots.Manmeet Singh,Partner, Saraf and Partners
However, the airline's woes are plentiful.
The lessors had contended before the high court that the airline's Resolution Professional didn't maintain the aircraft properly. The court ordered the RP to maintain the aircraft and granted lessors access to them. Later, the lessors initiated contempt proceedings against the RP for not following the court order.
However, if the lessors make claims regarding missing parts or defects in the aircraft, Chand suggests it wouldn't pose significant trouble, as these implications likely existed from the start.
He said that the resolution applicants would have already factored in such costs.
On a separate note, as far as the ongoing insolvency process before the NCLT is concerned, the RP and CoC would be entitled to seek more time to complete the proceedings, as per Singh.
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