The National Company Law Tribunal (NCLT) on Monday admitted applications filed by Go First lessors Jackson Square Aviation Private Ltd and Engine Lease Finance BV and directed the insolvency resolution professional (IRP) to reply within a week.
Jackson Square had filed an interlocutory application asking the court to restrain Go First from flying the eight aircraft leased by the company to the airline. In contrast, ELFBV placed a request to be allowed inspection of four engines leased to the airline and sought that the moratorium by the NCLAT order on May 22, upholding the NCLT order for voluntary insolvency, not be applied in this case.
Both argued that they had terminated the leases with the corporate debtor prior to the admission of the resolution process on May 10, which placed a moratorium on the assets of the airline.
Jackson Square argued that Go First had defaulted on rent payments on August 18, 2022, following which the company sent notices and finally cancelled the contract on May 3, a day after Go First had filed a Section 10 application under the Insolvency and Bankruptcy Code, 2016, for initiation of voluntary insolvency.
The Wadia Group-owned airline said it could no longer meet its financial obligations, blaming US company Pratt & Whitney’s ‘faulty engines’ for grounding 50% of its fleet.
ELFBV, the lessor of engines, argued that it too had terminated its contract with Go First following the failure of the airline to make payments for the lease of engines. It requested the special bench of NCLT that the declaration of moratorium does not apply to engines, as it had already started the process of redelivery of engines to the company.
ELFBV further sought to be allowed to inspect the engines, as per the lease agreement. The counsel for ELFBV argued that at its last inspection on March 16, it had found parts like the hydraulic pump, fan blade etc. missing. It stated that it had corresponded with the IRP to be allowed to inspect the engines.
Counsels appearing for the IRP asked the court for time to file a reply to both petitions.
The senior counsel appearing for IRP in the ELFBV case said the Committee of Creditors (CoC) would sit and decide on the relevant issues in a few days.
The special bench of NCLT refused to pass interim orders to limit Go First’s use of resources and listed the matter for June 15.
In another application filed by BOC Aviation (Ireland) Limited, which provides aircraft leasing services, that sought modification of the May 10 order, the court passed the direction for a copy of the application to be made available to IRP and listed the matter for June 15.
The court declared the Section 9 application for starting insolvency against Go First filed by courier company SS Associate Services Private Limited as infructuous, as Go First had filed voluntary insolvency proceedings and ordered the company to file a fresh claim before the IRP.
As per its filing on May 10, Go First had committed default of ₹2,660 crore toward aircraft lessors and ₹1,202 crore towards vendors.
Go First owes another ₹6,521 crore to six entities, which it counts as its financial creditors.
