India's Go First lenders to challenge move that could let lessors reclaim planes - sources

Central Bank of India

09/11/2023 07:52

By Siddhi Nayak
       MUMBAI, Nov 9 (Reuters) - Lenders of grounded Indian
airline Go First plan to legally challenge the aviation
watchdog's interpretation to retrospectively apply changes to
bankruptcy law that could allow lessors to reclaim planes,
according to four people with direct knowledge.
    India last month tweaked its laws to exclude leased aircraft
from assets that are frozen during bankruptcy proceedings. 
    With lessors of Go First up in arms about not managing to
get their planes back, the Directorate General of Civil
Aviation, in a court filing, said the law changes will apply
restrospectively, indicating relief for the lessors.
    But lenders of Go, to whom the airline owes $783 million,
fear the value of the grounded airline will deteriorate further
if planes are released, diminishing interest from potential
bidders and putting recovery of their funds at risk, the sources
said.
    They plan to tell a Delhi High Court judge the bankruptcy
law changes should apply prospectively, not retrospectively,
since Go was already under bankruptcy protection when the law
was amended, the sources said. 
    "Without the planes, the value of the airline will
deteriorate. The amended law seems to have deterred bidders
already," said one banker at a state-run bank with exposure to
the airline.
    The Delhi court is set to hear the ongoing dispute between
lessors and Go First next on Friday.
    The lenders' plea, if allowed by court, would be a setback
for lessors and mean more than 50 Airbus planes of Go First
would continue to be grounded in India.
    Dubai Aerospace Enterprise Capital and ACG Aircraft Leasing
told the court previously that some of their plane parts had
allegedly gone missing and that some jets were corroding.
    The Go First bankruptcy filing lists Central Bank of India
 CBI.NS , Bank of Baroda  BOB.NS , IDBI Bank  IDBI.NS  and
Deutsche Bank  DBKGn.DE  among its lenders
    Last month, Reuters reported that Go First received an
expression of interest from Jindal Power. The last day to submit
bids for the airline is Nov. 21, the four sources said.

 (Reporting by Siddhi Nayak
Editing by Aditya Kalra and Mark Potter)
 ((Siddhi.Nayak@thomsonreuters.com; +91 22 6921 7848; Reuters
Messaging: Twitter: https://twitter.com/siddhiVnayak))