A day after getting relief from the National Company Law Tribunal (NCLT), the Wadia group-led Go First Airlines will face another crucial test today as one of its lessors, SMBC Aviation Capital, has approached the appellate tribunal challenging the lower tribunal order to initiate insolvency proceedings in case of Go First.

The lessor's plea will be heard by the NCLAT bench today, and it is likely to seek a stay on the insolvency proceedings, which restricts lessors from taking back their aircraft until the moratorium is on.

SMBC Aviation Capital is the second largest aircraft lessor globally by number of aircraft. It specialises in leasing and trading aircraft, mostly focussing on young commercial jet aircraft. Its portfolio comprises 82% narrow-body aircraft and 62% new technology aircraft.

In a huge relief to Wadia group-led Go First Airline, the Delhi bench of the NCLT yesterday admitted the airline's plea for voluntary insolvency and has granted protection under moratorium from the recovery of its planes by foreign lessors.

The tribunal also ordered the initiation of a Corporate Insolvency Resolution Process (CIRP) and the appointment of a resolution professional, who will maintain the airline's status as a "going concern". Further, the airline is mandated to deposit ₹5 crore with the resolution professional to meet the expenses.

Nusli Wadia-controlled Go First airline had earlier sought voluntary insolvency proceedings and the imposition of an interim moratorium under the Insolvency and Bankruptcy Code (IBC).

The NCLT order could provide immediate relief to around 7,000 Go First employees as hopes of keeping the airline running are alive, but it has implications for foreign lessors, who have filed several requests with India's aviation regulator DGCA (Directorate General of Civil Aviation) to deregister at least 45 of the total 55 Go First Airways planes. Notably, the airlines are mandated to give backplanes if they default on a payment to lessors under the Cape Town Convention treaty.

Go First's major lessors are GY Aviation, Pembroke Aircraft, Narmada Aviation Leasing, Yamuna Aviation Leasing, and SMBC Aviation, among others. All of the lessors are based out of Ireland.

Go First has said it was forced to apply to the NCLT after Pratt & Whitney, the engine supplier for Go First’s Airbus A320neo aircraft fleet, refused to comply with an award issued by an emergency arbitrator. The order had directed Pratt & Whitney to release and dispatch without delay at least 10 serviceable spare leased engines to Go First by April 27, 2023, and a further 10 spare leased engines per month until December 2023.

The airline, which commanded a domestic market share of 7.8% in the January-March quarter, yesterday cancelled all its scheduled flights till May 19, citing ‘operational reasons’ as India’s bankruptcy tribunal admitted the airline’s insolvency plea. “The company has filed an application for immediate resolution and revival of operations. We will be able to resume bookings shortly,” the cash-strapped carrier said.

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