Go First: NCLAT to hear SMBC Aviation Capital's plea challenging insolvency, lessor says ‘why the hurry…’
1 min read 12 May 2023, 07:17 AM ISTSMBC Aviation Capital Ltd, a lessor of the Wadia group firm, told NCLAT that the initiation of insolvency by Go First was a ‘fraudulent exercise’.
PremiumNational Company Law Tribunal (NCLAT) on Friday will hear a plea filed by Go First's lessor SMBC Aviation Capital Ltd challenging the tribunal's order allowing insolvency.
SMBC Aviation Capital Ltd told NCLAT that the initiation of insolvency by Go First was a “fraudulent exercise".
The aircraft lessor through its counsel Arun Kathpalia submitted that it has already 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.
He also questioned the proceedings at the NCLT as the tribunal completed Go First's hearing of the voluntary insolvency plea in just one day. It also wanted to file a reply under Section 65 of IBC, which deals with fraudulent or malicious initiation of proceedings.
However "Instead of giving an opportunity, we were denied," Kathpalia added.
He further said prior to insolvency, the lease with Go First was terminated and it "was prevented from showing it".
"What was the hurry... when the petitioner (Go First) itself said there was no default of any financial creditors," he added.
SMBC Aviation Capital, which is one of the world's largest aircraft leasing companies, had moved the appellate tribunal NCLAT hours after the NCLT admitted Go First's plea to initiate the insolvency resolution process.
Historic move: Go First CEO
NCLT on Wednesday ordered a moratorium on Go First's assets and leases and appointed Abhilash Lal of Alvarez & Marsal as the interim resolution professional to take over management with immediate effect.
The resolution professional "shall ensure that retrenchment of employees is not resorted to as a matter of course", the tribunal's 41-page order said. Go First has a staff of around 7,000."
CEO Kaushik Khona, who was present as the order was read, hailed the tribunal's decision as "historic".
Go First had filed for bankruptcy earlier this month, citing a financial crisis caused by grounding almost half of its fleet due to "faulty" Pratt & Whitney engines. In response, the US engine maker denied the allegations, calling them "without merit".
(With inputs from agencies)
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