A recent Delhi High Court ruling has delivered a significant blow to grounded airline GoAir (now Go First) in its ongoing bankruptcy proceedings.
The court directed the Directorate General of Civil Aviation (DGCA) to deregister all 54 of GoAir’s leased aircraft within five working days, paving the way for their repossession by lessors. This decision marks a major setback for GoAir’s efforts to revive its operations under insolvency resolution. The airline, which had voluntarily filed for bankruptcy in May 2023, was hoping to restructure its debt and potentially relaunch with a smaller fleet. However, the court’s ruling prioritises the claims of lessors, who have been locked in a dispute with GoAir over the fate of the leased aircraft since the airline’s financial troubles began. The crux of the issue lies in the Insolvency and Bankruptcy Code (IBC). Initially, the DGCA was hesitant to deregister the aircraft due to a moratorium clause within the IBC that protects assets during insolvency proceedings. However, a Ministry of Corporate Affairs notification issued in October 2023 clarified that this moratorium does not apply to aircraft leasing agreements. This clarification, coupled with a subsequent affidavit filed by the DGCA, ultimately swayed the High Court’s decision in favour of the lessors.
For the lessors involved, including Pembroke Aviation, Accipiter Investments Aircraft 2, EOS Aviation, and SMBC Aviation, the court’s ruling offers a welcome reprieve. They will now be able to reclaim their aircraft, which could then be leased to other airlines or potentially sold on the open market. The Airports Authority of India (AAI) will play a key role in facilitating the export of these aircraft and ensuring they meet airworthiness standards. Looking ahead, the deregistration of GoAir’s leased fleet casts a shadow of uncertainty over the airline’s future. Without operational aircraft, GoAir’s ability to resume scheduled passenger services appears significantly hampered. The airline may now need to explore alternative options, such as negotiating lease agreements for a new fleet or potentially merging with another carrier. The Delhi High Court’s ruling serves as a stark reminder of the challenges airlines face in navigating insolvency proceedings. While the IBC aims to facilitate financial restructuring and business revival, the competing interests of creditors and lessors can lead to complex legal battles that ultimately impact the airline’s ability to operate.
