DELHI HIGH COURT DEREGISTERS GO FIRST'S 54 AIRCRAFT! WHAT NEXT FOR THE AIRLINE?

(Authored by Samta Barnali Achintya)

In May 2023, the bankrupt airline Go First entered the insolvency resolution process following its voluntary plea for insolvency.

In a blow to financially struggling carrier Go First, the Delhi High Court granted the lessors' request for the deregistration of the company's 54 airplanes.

Delhi High Court has directed civil aviation regulator DGCA to process the deregistration applications of aircrafts leased by the airline within five working days. Additionally, the court prohibited Go First, which owes its creditors more than Rs 6,200 crore, from operating these planes.

The Resolution Professional of Go First has also been prohibited from removing any accessories, spare parts, documents, or other materials from the planes. Also, the RP has been directed to furnish current information and documentation related to the aircraft to the lessors.

Go First's RP previously informed the HC that returning the aircraft to the lessors would effectively render the airline "dead," with 7,000 employees to support.

Earlier this month, the National Company Law Tribunal extended Go First's insolvency proceedings by 60 days, beyond the previous deadline of April 4, 2024. The airline ceased operations on May 3, 2023.

The RP of Go First informed the tribunal that the insolvency proceedings were in their final stages, with the CoC deliberating over two resolution plans for the bankrupt airline.

The two bidders include Sky One, an aviation firm based in Sharjah led by Jaideep Mirchandani, and Ajay Singh, the promoter of domestic airline SpiceJet, along with Busy Bee Airways, owned by Nishant Pitti, who also owns the online travel portal EaseMyTrip.

How will this judgement impact the shareholders of Go Air and its employees?

Vidhan Vyas, Founder, Vyas Legal, stated, ‘This will surely impact the shareholders of the debt-ridden airlines negatively.’

‘However, this is likely to be challenged in division bench and in the supreme court,’ Vyas added.

How could this impact aviation jobs in India, and what legal hurdles might arise for starting or running aviation businesses in the country?

‘As far as difficulties in the aviation business are concerned, under law, a lessee was always permitted to deregister and export aircrafts under the extant law. The only change (rather clarity) that has come about after the GoFirst insolvency is that even an insolvency moratorium will not protect an aircraft career from losing the lease which is a significant risk for the business owners,’ said Smiti Tewari, Partner, Khaitan Legal Associates, in a statement.

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2024-04-26T14:23:04Z dg43tfdfdgfd