 "Go First")
The lessors of Go First aircraft on Thursday opposed the airline’s plea to admit insolvency in the Delhi Bench of the National Company Law Tribunal (NCLT). The tribunal reserved its order after listening to the arguments of both sides for four and a half hours.
Senior advocate Neeraj Kishan Kaul, appearing for Go First, told the tribunal till the filing of its plea, the airline had not defaulted on paying its financial creditors. He said of its 54 aircraft, 26 were operational.
“We are capable of operating these 26 aircraft, and are also capable of paying salaries and dues on fuel, landing, and other things to stay operational,” he said.
Driven by a cash crunch, Wadia-owned Go First had on Tuesday filed for insolvency. The airline blamed engine manufacturer Pratt & Whitney for the step and suspended all flights till Thursday. Go First in its application also said the company had cancelled 4,118 flights (with 77,500 passengers) in the last 30 days.
Kaul told the court the intent of the Insolvency and Bankruptcy Code (IBC) had always been revival and asked the court for an interim moratorium.
“My asset is my aircraft and it is frozen currently,” he said.
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A moratorium is the suspension of all or certain legal remedies against debtors.
He urged the court to grant it an interim moratorium and, if that was not possible, then admit its insolvency plea under the IBC. He said the interim resolution professional could look after the airline once the moratorium order was given. Interim resolution professionals are appointed to conduct the insolvency process.
Go First told the court as of May 6, 1.9 million passengers were booked with the airline. “If we go the ‘Jet way’, we will be removed from the market, which would encourage monopolistic practices,” Kaul said.
Meanwhile, senior advocate Arun Kathpalia, appearing for the airline’s lessors (SMBC Capital Aviation, GAL, CDB Aviation, Sonoram Aviation Company, and MSPL Aviation), said Kaul could not ask for a moratorium even before the parties were heard.
He told the court under the IBC there was no provision of an interim moratorium.
“A moratorium is granted only after the insolvency application is admitted by the court. In most cases, the tribunal does not admit an appeal in the first hearing without even listening to the parties. The provision of pre-moratorium applies only to personal insolvency,” he said.
He argued a moratorium would only increase the cost for the airline because it would have to pay charges for the aircraft without utilising them.
“Mr Kaul wants the first-day, first-show tickets for the movie. If the Wadia Group cannot manage the airline then what would the interim resolution professional do? How will they chase Pratt and Whitney?” he asked the tribunal.
He requested the court to not admit the airline’s insolvency plea and give him time to file an application for “malicious intent” (Section 65 of the IBC) if any such thing was found.
The Section says any person who initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency or liquidation, as the case may be, the adjudicating authority (NCLT) might impose upon such person a penalty.
For the past few days, the airline has been flying around 200 flights daily, carrying 25,000-30,000 passengers a day. Its flights have been reduced by about 50 per cent in the past one year.
The company in its application said that as of April 30, it owed its creditors Rs 11, 463 crore. Go First said if its application was not admitted, 7,000 direct and 10,000 indirect employees would be affected.
