According to a court document obtained by Reuters, India’s aviation watchdog has put on hold petitions from lessors to reclaim planes from Go First since the airline’s bankruptcy process imposes an asset freeze that surpasses such requests.
Go First’s lessors are at odds with the airline and India’s Directorate General of Civil Aviation (DGCA) over the right to confiscate its aircraft due to unpaid rent. The lessors have submitted up to 40 requests to the watchdog.
On May 10, Go First received bankruptcy protection. The lessors contend that because the leases were terminated by leasing companies, they have no legal claim to the aircraft. However, the Indian government and the airline dispute this claim and assert that an assets freeze is required by bankruptcy law.
The DGCA explained for the first time that, given the assets freeze, it has “no other option” except to keep all petitions “pending in abeyance” in a court filing dated May 29.
The applications have been put on hold until the end of the moratorium period under the bankruptcy process, which is at least six months but may be longer, according to the filing, even though the DGCA hasn’t rejected them.
Just as airlines are placing record orders and negotiating lease arrangements to fulfil demand for air travel, the legal battle between the regulator and the lessors is emerging as a crucial test for New Delhi’s decision-making processes.
The second-largest aircraft lessor in the world, SMBC Aviation Capital, has already issued a warning that India’s decision to prohibit jet repossession is turning the nation into a “risky jurisdiction”.
Standard Chartered’s Pembroke Aircraft Leasing, SMBC, CDB Aviation’s GY Aviation Leasing, and BOC Aviation are some of the lessors for Go First.
The Cape Town Convention, a global agreement agreed in 2001 to safeguard repossession rights, is in opposition to the DGCA’s position. The treaty has been ratified by India, but the DGCA claimed that because there is no local law enforcing it, it is ineffective.
Source- the print