Go First crisis: NCLAT upholds NCLT order, setback to lessors as bankruptcy proceedings to continue

The National Company Law Appellate Tribunal on Monday upheld the insolvency proceedings against cash-strapped airline Go First in a setback to efforts of its lessors to repossess their aircraft. Go First's lessors also include SMBC Aviation Capital and CDB Aviation's GY Aviation Leasing. Upholding the NCLT's May 10 order, the appeals tribunal disposed of the lessors’ petition and asks them to file an appeal before the NCLT. The IRP (Interim Resolution Professional) is allowed to proceed with the insolvency resolution process.

Arun Kathpalia, senior counsel appearing for the lessor, had argued that it had terminated its lease with Go First before the moratorium and now wants to repossess the aircraft through insolvency. “Go First has no rights over the planes, which it does not own," he said.On the other hand, Go First had stated that it has already invested ₹200 crore in the company just to keep it as a going concern. Therefore, the allegations of mala fide on the part of the company’s erstwhile management were baseless, it had said.Go Airlines, which rebranded itself as Go First in May 2021, voluntarily filed for insolvency on 2 May, citing persistent engine issues in its fleet resulting in grounding of 30-50% of its total aircraft count since 2020. While the petition of the airline for insolvency was admitted on 10 May, the airline's lessors had approached the civil aviation regulator Directorate General of Civil Aviation 4 May onwards to de-register over 40 aircraft out of the airline's fleet size of 54 aircraft.