India’s Directorate General of Civil Aviation (DGCA) has put on hold requests from lessors to repossess aircraft from Go First (GOW, Mumbai International), which filed for insolvency resolution on May 2, as the ongoing bankruptcy process has frozen its assets, superseding such requests, a court filing has revealed.
The regulator’s disclosure on May 29, which was not made public but was seen by the newspaper Business Standard and by Reuters, confirmed the worries lessors expressed when the courts granted Go First’s bankruptcy protection from its creditors, including the leasing companies, on May 10. Lessors have filed more than 40 requests with the watchdog to allow repossession, citing missed payments.
The lessors contend that Go First has no right to retain their aircraft as the leases have been terminated, but the DGCA and the airline disagree, pointing to the country’s bankruptcy law automatically imposing an all-encompassing asset freeze.
In the court filing, the DGCA divulged for the first time that it has “no other option” but to keep all applications “pending in abeyance” given the assets freeze, Reuters reported. The watchdog stressed it was not rejecting the applications but that they had been put on hold until the end of the moratorium period under the bankruptcy process - which, it added, would take six months or longer.
Last week, India’s National Company Law Appellate Tribunal (NCLAT) denied an application by some lessors to overturn the insolvency proceedings, preventing them from legally repossessing their aircraft from the low-cost carrier.
On May 30, the airline announced on its website that it had extended the suspension of its operations until June 4, pledging: “We will be able to resume bookings shortly.”
According to the ch-aviation fleets module, Go First currently operates a fleet of 54 aircraft, namely five A320-200s and forty-nine A320-200Ns. All are leased, from 12 different lessors.
Some of the lessors involved have warned that India’s reputation as a place to do business is at risk. One of them, SMBC Aviation Capital, said in mid-May that because India had moved to block repossessions, the country had become “a risky jurisdiction for aircraft leasing”.
The other 11 lessors working with Go First are Aviation Capital Group, BOC Aviation, CCB Financial Leasing, CDB Aviation, DAE Capital, ICBC Financial Leasing, Jackson Square Aviation, Maverick Aviation Partnership, Merx Aviation Finance, Minsheng Financial Leasing, and SKY Leasing.
