Lenders of Go First, the grounded Indian airline, are planning to legally challenge the Directorate General of Civil Aviation’s (DGCA) interpretation of the retrospective application of changes to the bankruptcy law. Last month, India amended its laws to exclude leased aircraft from frozen assets during bankruptcy proceedings. However, the lessors of Go First have been aggrieved by the delay in reclaiming their planes. In response, the DGCA has indicated that the changes to the law will apply retrospectively, providing some relief to the lessors.
On the other hand, the lenders, who are owed $783 million, are concerned that releasing the planes will further deteriorate the value of the grounded airline. This could dissuade potential bidders and put their recovery of funds at risk. The lenders plan to argue in court that the bankruptcy law changes should only apply prospectively, as Go First was already under bankruptcy protection when the law was amended. They fear that without the planes, the value of the airline will diminish, discouraging potential bidders in the ongoing bidding process.
The dispute between the lessors and Go First is set to be heard by the Delhi High Court. If the lenders’ plea is granted, it would be a setback for the lessors, and more than 50 Airbus planes of Go First would remain grounded in India. Previously, Dubai Aerospace Enterprise Capital and ACG Aircraft Leasing had raised issues of missing plane parts and corrosion of some jets in court.
Go First’s bankruptcy filing lists Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank among its lenders. Last month, Jindal Power expressed interest in acquiring Go First. The deadline for bids for the airline is November 21.
