By Arpan Chaturvedi
NEW DELHI (Reuters) -An Indian tribunal on Wednesday granted bankruptcy protection to Go Airlines (India) Ltd, a move that will help the country’s fourth-largest carrier attempt to revive itself but complicate foreign lessors’ efforts to repossess their planes.
The low-cost carrier, recently rebranded as Go First, has said its financial crisis was sparked by what it called “faulty” Pratt & Whitney engines that grounded about half its 54 Airbus A320neos. The U.S. engine maker, part of Raytheon Technologies, has said the claims are without evidence.
The National Company Law Tribunal said an interim resolution professional will takeover management of the airline with immediate effect and ordered a moratorium on Go First’s assets and leases.
Go First’s Chief Executive Officer Kaushik Khona, who was present as the order was read, told reporters the decision was “historic”.
This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate contracts and debt.
The move could, however, complicate repossession efforts by lessors, which have in recent days filed requests with India’s aviation regulator for the return of about 40 Go First planes after rental payments were missed.
Indian law prohibits any such recoveries once bankruptcy proceedings are initiated for a company, according to lawyers and industry sources.
“Lessors must be very, very concerned right now. The repossession requests will be of no consequence as the insolvency and bankruptcy process has kicked in,” said Abhirup Dasgupta, a partner at HSA Advocates who specialises in insolvency law but is not involved in the Go First matter.
(Reporting by Arpan Chaturvedi, Aditi Shah and Aditya Kalra; Editing by Jamie Freed and Edwina Gibbs)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.