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Business News/ Companies / News/  Go First case: Govt may clarify on amendments in IBC on leased aircraft
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Go First case: Govt may clarify on amendments in IBC on leased aircraft

Lessors have maintained that the recent notification lets them retain their aircraft.

Go First has been grounded since May. (Photo: ANI)Premium
Go First has been grounded since May. (Photo: ANI)

New Delhi: The Centre is likely to issue clarification on whether lessors of Go First airline can repossess their aircraft and engines, following recent modifications to the Insolvency and Bankruptcy Code (IBC) by the Ministry of Corporate Affairs, the counsel for the Indian government told the Delhi high court on Thursday.

The recent IBC changes, dated 3 October, state that Section 14(1) - imposing a moratorium on insolvency proceedings - does not cover deals related to aircraft, engines, airframes, or helicopters. This alteration has enabled Go First's lessors to advocate for the repossession of their assets in tribunals and courts. However, there might be delays due to changes within the National Company Law Tribunal (NCLT) bench overseeing the issue.

Additional solicitor general Chetan Sharma said that they have asked the government to pass an ‘executive direction' as the legal feedback on the matter came with multiple disclaimers, leading to uncertainty.

The Resolution Professional (RP) for Go First argued that the changes are merely a notification and not a formal amendment. The RP also suggested that lessors should seek clarifications from the NCLT instead of the Delhi high court. 

The lessors maintained that the recent notification lets them retain their aircraft.

On 12 October, the high court had instructed Go First's RP to supply key aircraft documents to lessors within a week. The court also permitted lessors to maintain 24-hour security services for their aircraft, but at their own expense, noting evidence of potential misuse of the planes.

Earlier this year, the high court had allowed lessors to inspect the grounded aircraft, a decision later upheld by the Supreme Court.

Separately, Jindal Power, owned by billionaire Naveen Jindal, has expressed preliminary interest in the beleaguered airline.

In May, Go First had filed for insolvency due to financial challenges stemming from Pratt and Whitney engine issues. On 10 May, the NCLT approved its plea leading to the suspension of the airline’s board.

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ABOUT THE AUTHOR
Krishna Yadav
Krishna, a lawyer turned journalist, is a key member of Mint's corporate team. He covers major legal battles in Delhi's courtrooms, with a focus on finance, markets, and policy. Additionally, he crafts easy-to-understand explainers for complex stories and holds a PG Diploma from the renowned Asian College of Journalism.
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Published: 19 Oct 2023, 06:02 PM IST
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