Insolvency and Bankruptcy Code.
The notification to exempt transactions involving aircraft, aircraft engines, and helicopters from the Insolvency and Bankruptcy Code (IBC) comes at a time when Go First is undergoing an insolvency resolution process
The provisions of Sub-Section (1) of Section 14 of the Insolvency and Bankruptcy Code, 2016, shall not apply to transactions, arrangements or agreements related to aircraft, aircraft engines, airframes and helicopters, according to a notification issued by the Ministry of Corporate Affairs on Wednesday, October 4.
Section 14(1) of the IBC is related to the moratorium.
“The central government hereby notifies that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters,” according to the ministry’s notification.
The notification comes at a time when Go First is undergoing an insolvency resolution process, and a moratorium is in place and lessors are locked in a legal battle with Go First for taking back the leased planes.
The Convention on International Interests in Mobile Equipment and the
Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment were adopted under the joint auspices of International Civil Aviation Organization and the International Institute for the Unification of Private Law concluded at Cape Town on November 16, 2001. India is a signatory.
Go First had on May 2 filed a plea for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT). It filed its petition under Section 10 of the Insolvency and Bankruptcy Code to initiate insolvency against itself.
The plea is different from Sections 7 and 9 where the financial and operational creditors, respectively, take the corporate debtor to the National Company Law Tribunal (NCLT) in case of default in payment of dues.
Last week, the Aviation Working Group (AWG) cut India’s rating in terms of compliance with the international law governing the leasing of aircraft amid lessors continuing efforts to take back planes leased out to the now-grounded Go First.
AWG — a not-for-profit legal entity comprised of major aviation manufacturers, leasing companies and financial institutions — has a negative outlook for the country.
Under the Cape Town Convention (CTC), lessors can take back the possession of aircraft leased to airlines.
India is a signatory of CTC but is yet to ratify the convention. AWS, which maintains the CTC Compliance Index, has cut the rating score to 2 from 3.5, with a negative outlook.
