GoFirst | Business Upturn

Go First Insolvency Case: Delhi High Court hearing deferred to July 12

Viditha Ganji — Tue, 11 Jul 2023 16:43:06 +0000

A two-judge bench of the Delhi High Court on July 11 deferred to July 12 the hearing of appeals by grounded airline Go First’s resolution professional against the order of a single judge permitting the aircraft lessors to inspect and carry out maintenance work of their 30 aircraft and their parts twice in a month.

During the hearing today, senior advocate Rajiv Nayyar, appearing for one of the lessors, argued that the moratorium would not apply to them as they had terminated their leases prior to Go First being admitted to insolvency. He further argued that Go First cannot use the aircraft as the rules mandate that it cannot be used once the lease is terminated.

The bench at this point questioned the lessor on the applicability of Section 14 of Insolvency Bankruptcy Code, 2016, in this case. Section 14 prohibits the alienation or sale of any assets owned by a company under insolvency. Nayyar argued that the company does not own the asset as they have only been leased to them.

The bench also questioned Director General of Civil Aviation (DGCA) on why aircraft lessors could not undertake its maintenance. DGCA responded by stating that Go First is Continuous Airworthiness Maintenance Organisation (CAMO) compliant, while the lessors are not. According to DGCA, the Civil Aviation Requirements (CAR) do not permit any organisation other than CAMO compliant ones to maintain the aircrafts. DGCA also made it clear that they would not be able to permit Go First to resume operations unless they are certain that a CAMO compliant organisation is maintaining the aircraft.

Appearing for the RP, senior advocate Neeraj Kishan Kaul reiterated that Go First was ready to commence operations as soon as they get the requisite approval from DGCA. He further argued that the lessors had not terminated the leases despite knowing fully well that Go First was defaulting in payments since 2020, however they did so once Go First announced that it was filing for voluntary insolvency.

The court decided to continue the hearing on July 12 due to paucity of time.

The hearing of the Go First insolvency case is expected to be closely watched by other airlines and aircraft lessors in India. The outcome of the case could have implications for the future of the insolvency resolution process in the country.

Go First Aircraft Inspection Dispute: RP raises concerns of potential disruptions, Delhi HC to hear plea

Viditha Ganji — Mon, 10 Jul 2023 17:04:57 +0000

The resolution professional (RP) of Go First, formerly known as GoAir, expressed concerns in the Delhi High Court on Monday over the potential disruptions that may arise from allowing lessors to inspect the airline’s aircraft. The division bench of the Delhi High Court has postponed the hearing on the matter to Tuesday. This comes in the midst of a legal battle over an interim order that permitted lessors to carry out maintenance work and inspections on Go First’s 30 aircraft within the next three days.

In a single-judge bench ruling on July 5, the Delhi High Court had granted permission to the lessors to conduct maintenance tasks on the engines and components of Go First’s aircraft twice a month until the disposal of the writ petitions. The court also prohibited Go First and its agents from removing any components or operational and manual documents from any of the 30 aircraft. However, the RP representing Go First argued that this interim order disregarded a proposed resolution that had received 100% approval from the Committee of Creditors (CoC) and had been submitted to the Directorate General of Civil Aviation (DGCA).

The RP’s counsel contended that the matter was under the jurisdiction of the National Company Law Tribunal (NCLT), raising doubts about the civil court’s authority to rule on the writ petition. The counsel emphasized that the proposed resolution, approved by the CoC, should have been considered as it directly addressed the concerns of all stakeholders involved.

Regarding the aircraft themselves, the court was informed that out of Go First’s fleet of 56 aircraft, 26 had already undergone inspection by the DGCA and were deemed fit to fly. The remaining aircraft are awaiting engine delivery from Pratt and Whitney. It was revealed that emergency arbitration proceedings had been initiated in Singapore against Pratt and Whitney to obtain new engines. The DGCA informed the court that, according to current regulations, only Go First has the authorization to carry out maintenance work, and lessors are not permitted to do so.

On the other hand, lessors, including Pembroke Aircraft Leasing 11, SMBC Aviation Capital, Accipiter Investments Aircraft 2, Eos Aviation 12 (Ireland), DAE SY 13 Ireland, SFV Aircraft Holdings Ire 9 DAC Limited, ACG Aircraft Leasing Ireland Ltd, and GY Aviation Lease 1722 Co. Ltd, approached the high court seeking deregistration of the leased aircraft.

The NCLT’s principal bench in Delhi had previously accepted Go First’s voluntary plea for an insolvency resolution process on May 10. In response, the tribunal appointed an insolvency resolution professional (IRP), suspended the board, and imposed a moratorium on the airline’s financial obligations.

As the legal battle continues, the Delhi High Court is set to further examine the matter and weigh the arguments presented by both parties. The resolution of this dispute will have significant implications for the future operations and financial stability of Go First and its stakeholders.

Here’s why Indigo stock rallied over 6% in trade today

Markets Desk — Wed, 03 May 2023 10:53:16 +0000

Shares of Interglobe Aviation or Indigo surged over 6% in trade on Wednesday and ended the session at Rs 2,164, up 4.6%, largely due to expectations of a positive impact on the company after GoFirst Airlines on Tuesday filed for bankruptcy amid cash crunch.

GoFirst filing for insolvency is expected to remove 9% of domestic supply in the aviation sector, which could largely benefit Indigo. Brokerage firm Credit Suisse also says that the crisis for GoFirst could benefit Indigo through higher market share and stronger yields in a capacity constrained environment. Further, increasing leverage with global OEMs of engines & planes lessors may be keen to allocate some of the GoFirst aircraft to Indigo given similar fleet type.

According to Credit Suisse, a similar case happened back in favor of Spicejet when Jet Airways shut operations based on fleet type overlap.

As on March 2023, Indigo is the leader in the domestic market with a share of 57%.