Voluntary insolvency by Go First a fraudulent exercise: SMBC Aviation to NCLAT

New Delhi: Initiation of insolvency by Go First was a "fraudulent exercise", alleged one of the aircraft lessors of the Wadia group firm SMBC Aviation Capital Ltd before the National Company Law Appellate Tribunal (NCLAT).

SMBC Aviation Capital through its counsel Arun Kathpalia submitted that it has already terminated its lease with Go First before the moratorium and it now wants to repossess those aircraft through insolvency.

"Go First has no rights over the planes, which it does not own," he said.

Moreover, he also questioned the proceedings at the National Company Law Tribunal (NCLT), which completed its hearing over Go First's plea to voluntarily initiate insolvency proceedings against itself in one day only.

Lessors opposing Go First's plea wanted to file a reply under Section 65 of IBC, which deals with fraudulent or malicious initiation of proceedings.

However "Instead of giving an opportunity, we were denied," Kathpalia added.

He further said prior to insolvency, the lease with Go First was terminated and it "was prevented from showing it".

"What was the hurry... when the petitioner (Go First) itself said there was no default of any financial creditors," he added.

The appellate tribunal was hearing the urgent petition moved by SMBC Aviation Capital against the decision of the Delhi-based Principal bench of the National Company Law Tribunal (NCLT), which on Wednesday admitted Go First's plea to initiate the insolvency resolution process against the airline.

SMBC Aviation Capital, which is one of the world's largest aircraft leasing companies, had moved the appellate tribunal NCLAT hours after the NCLT admitted Go First's plea to initiate the insolvency resolution process.

The matter remained part-heard and a two-member bench would continue its hearing on SMBC Aviation Capital's petition on Friday.

Moreover, it has also asked the former promoters/ management of Go First to file an application to be impleaded as a party.

The direction came after the counsel appearing on behalf of former promoters/ management submitted that they have not been served a petition copy by SMBC Aviation Capital Ltd.

Over this, the aircraft lessor's counsel replied that a copy of the petition has already been served to the Interim Resolution Professional, who has now replaced the board after the initiation of the insolvency proceedings.

Moreover, two more aircraft lessors -- GY Aviation and SFV Aircraft Holding -- on Thursday moved the NCLAT against Go First's insolvency proceedings.

With this, the total number of lessors before the National Company Law Appellate Tribunal against Go First's insolvency has become three.