Centre exempts aircraft from moratorium protection of IBC
Insolvency and Bankruptcy Code, 2016.
The government’s action comes after the National Company Law Tribunal ruling in Go First’s case which put a moratorium on lessors to repossess aircraft. However, government officials told ET that the notification will not impact the Go First case, as it cannot be applied retrospectively.
Lessors are stuck in long court battles as they try to recover their aircraft even though the bankrupt carrier now has the protection of law not to return them despite payment defaults.
This hit the confidence of lessors, which are backed by top banks and financing companies, and immediately led to increase in risk premiums from other Indian airlines increasing their cost of doing business.
Aviation Working Group (AWG), a global aviation leasing body comprising major aircraft manufacturers and lessors, last week further downgraded India as lessors have not been able to repossess their planes from Go First more than four months after the airline filed for insolvency.
According to the notification issued by the Ministry of Corporate Affairs and reviewed by ET, the government said that since India is a signatory to the Cape Town Convention, there is a requirement to bring local laws in sync with the convention.
The convention makes it easier for leasing companies to repossess aircraft in case of non-payment of lease rental by an airline.
Earlier in June, the government had brought in a similar move to recover assets of companies in the oil sector even when they are undergoing the IBC process.
“It is a very good and positive mood, two days after the Aviation Working Group reduced India's ranking under the CTC Compliance Index.
