Lessors told appellate tribunal each aircraft engine is valued at $15 mn and needs upkeep
The National Company Law Appellate Tribunal (NCLAT) on Friday allowed Engine Lease Finance BV to inspect four of its engines leased to insolvent airline Go First.
The NCLAT gave the airline’s resolution professional (RP) 10 days to give the engine lessor the date of the inspection.
The NCLAT modified an interim order by the National Company Law Tribunal (NCLT) that said lessors were not allowed to inspect Go First’s aircraft or parts.
"The Adjudicating Authority (NCLT) refusing inspection is not approved. Inspection of engines is allowed," said the NCLAT. It also said that other issues raised by the parties will be addressed by the NCLT in the next hearing on September 1.
The lessors told NCLAT that each engine is valued at $15 million and needs upkeep. It said that the RP had sent them a letter on June 5 on the subject of inspection of engines but no date was specified for it.
The lessors said that while the NCLT had disallowed it to inspect engines, the Delhi High Court had permitted so. The company pointed out that the moratorium given to Go First should not apply to the engines but the NCLT had ruled otherwise.
Meanwhile, counsel for the RP said that since the main matter is pending before the NCLT, the NCLAT should not get involved in this.
“It is pertinent to mention that the Directorate General of Civil Aviation (DGCA) has not deregistered the aircraft, which means that they are available to the corporate debtor (Go First in this case) to resume operations. Therefore, as long as the aircraft/engines are registered, they can be used for operating or flying to keep the corporate debtor as a going concern, however, within safeguards/safety norms prescribed by the regulators,” said the NCLT’s interim order.
The tribunal was hearing a plea filed by lessors — Bluesky 31 Leasing Company, Bluesky 19 Leasing Company, Jackson Square Aviation Ireland, SMBC Aero Engine Lease, Engine Lease Finance, and BOC Aviation (Ireland) — mainly to refrain Go First from operating the aircraft owned by them for commercial use. The tribunal said that to keep Go First alive, the aircraft leased to it must be flown.
NCLT on July 26 said Go First could fly aircraft in its possession if those planes were still registered with the civil aviation regulator.
“In order to keep the corporate debtor as a going concern, the aircraft have to be flown, hence, the aircraft shall be with the corporate debtor and shall be operated by the corporate debtor. Therefore, we see no reason to allow this interim relief claimed by the applicants (engine and aircraft lessors),” said the order.
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