The National Company Law Appellate Tribunal (NCLAT) upheld an order passed by the National Company Law Tribunal (NCLT) admitting an application by Go First Airlines to initiate voluntary insolvency proceedings. The NCLAT rejected a plea filed by the lessors of Go First Airlines’ aircraft, who sought to take possession of the aircraft. The lessors, namely SMBC Aviation Capital Ltd, GY Aviation, and SFV Aircraft Holdings, had leased out 26 aircraft to Go First.
The lessors argued that the aircraft lease had terminated before the moratorium was granted, and therefore, the moratorium could not impose a freeze on third-party assets.
The NCLAT advised the appellants to seek further relief from the adjudicating authority and clarified that they could file an appropriate application regarding the applicability of the moratorium on the aircraft whose leases were terminated before the admission of the insolvency application. The tribunal also granted liberty to the Interim Resolution Professionals (IRP) to file an application concerning the claims of both parties related to the aircraft in question.
As a result of the NCLAT’s order, the moratorium imposed by the NCLT will remain in place. The aircraft lessors now have the opportunity to file an application at the NCLT to seek clarification on the applicability of the moratorium on the aircraft for which leases were terminated before Go First’s insolvency. The IRP is also allowed to file an application at the NCLT regarding the claims of both parties regarding the aircraft. The NCLAT directed the NCLT to decide these applications without being influenced by its own observations.
The suspended management was represented by Diwakar Maheshwari, while senior advocate Arun Kathpalia appeared for the lessors. The NCLAT, on May 15 had reserved its judgment on the plea and scheduled it for May 22.
Go First’s arguments
Go First Airlines countered the claims made by the lessors, stating that it had initiated the insolvency proceedings with genuine intentions to protect its 7,000 employees and ensure healthy competition in the aviation sector. The airline’s IRP argued that it owed over ₹1,000 crore to its vendors, and the insolvency process would help repay its dues.
The NCLT had admitted Go First’s voluntary plea for insolvency on May 10 and appointed an IRP while suspending the board and imposing a moratorium on the airline’s financial obligations.