NCLAT upholds NCLT order admitting plea by Go First Airlines for initiation of insolvency proceedings

The National Company Law Appellate Tribunal (NCLAT) Monday upheld an an order passed by National Company Law Tribunal (NCLT) which had admitted an application by Go First Airlines seeking initiation of voluntary insolvency proceedings..A coram of Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra of NCLAT rejected the plea filed by lessors of aircrafts of Go First Airlines to take possession of the aircrafts..The lessors, SMBC Aviation Capital Ltd, GY Aviation and SFV Aircraft Holdings, moved the NCLAT after the NCLT at Delhi admitted the application filed by Go First Airlines..The lessors had leased out 21 aircrafts to Go First airlines. The lessors informed NCLAT that they had approached aviation regulator DGCA for deregistration and repossession of Go First’s aircrafts.The lessors also argued that aircraft lease terminated before the moratorium was granted and hence moratorium couldn't impose a freeze on third-party assets.The NCLAT, however, asked the appellants to approach the adjudicating authority for any further relief."The Appellant(s) as well as IRP (Interim Resolution Professional) are at liberty to make appropriate Application before the Adjudicating Authority for declaration with regard to applicability of the moratorium on the aircrafts with regard to which Leases in favour of the Corporate Applicant were terminated prior to admission of Section 10 Application, which Application need to be considered and decided by the Adjudicating Authority in accordance with law," the Tribunal said. It added, "The Appellant(s) and the IRP are also at liberty to make an appropriate Application under Section 60, sub-section (5) with regard to claim of possession and other respective claims of both the parties relating to the aircrafts in question, which need to be decided by the Adjudicating Authority in accordance with law.".Go Airlines moved the NCLT earlier this month to initiate the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC).It reasoned that due to faulty engines supplied by American company Pratt & Whitney (P&W), the grounding of its aircrafts increased from 31% in 2020 to more than 50% in April 2023.They claimed that this cost the company a loss of over ₹10,800 crore..The NCLT Delhi on May 10 admitted the plea and declared full moratorium for the company.It also directed the company's suspended board of directors to co-operate with the IRP to ensure there are no layoffs..Senior Advocates Arun Kathpalia, Krishnendu Datta and Sathvik Varma along with advocates Abhijeet Sinha, Pranaya Goyal, Marylou Bilawala, Sharleen Lobo, Dhruv Khanna, Chiranjivi Sharma, Apoorva Kaushik, Neetika Sharma, Girish Shankar, Kshitij Wadhwa, Aditya dhupar, Palash Singhvi, Ankit Garg, R Taneja appeared for the aircraft lessors.Senior Advocates Ramji Srinivasan and Ritin Rai, with advocates Shruti Pandey, Namrata Saraogi, Ramakant Rai, Siddharth Ranate, Varun Kr Tikmani, Sumesh Srivastava, Dhristi Kaushik, Ravin Kapur appeared for the IRP. Senior Advocate Maninder Singh and P Nagesh with advocates Diwakar Maheshwari, Pranjal Kishore, Shreyas Edupuganti, Shouryaditya, Suhas Puthige, Pratiksha Mishra appeared for the suspended Board of Directors. .[Read Judgement]