Aviation and Airlines (Commonwealth Union) _ India has reportedly made significant updates to its insolvency regulations, specifically excluding leased aircraft from deferred payments when an airline undergoes bankruptcy. This adjustment is viewed as a potential resolution to conflicts between global leasing regulations and India’s insolvency laws. The modification is intended to bolster India’s reputation as a reliable destination for leasing aircraft, particularly following the challenges faced by Mumbai-based Go First in repossessing its aircraft after filing for bankruptcy. The amendment signifies that the moratorium, activated when an airline suspends operations due to bankruptcy, will not be applicable to transactions involving aircraft, engines, airframes, and helicopters.
The legal dispute between Go First and its lessors had strained the airline’s plans to resume operations. The recent changes aim to bring clarity to the aviation leasing landscape in India and foster a more favorable environment for lessors. The alterations suggest that the moratorium provisions specified in Section 14 of India’s Insolvency and Bankruptcy Code will not be applicable to global aircraft leasing regulations governed by the Cape Town Convention. This international treaty protects repossession rights and ensures that certain stipulations will not affect transactions related to aircraft.
Ramesh Vaidyanathan, Managing Partner of BTG Advaya, an Indian law firm, emphasized the potential positive impact of these changes on India’s image, stating, “With this, India can hope to somewhat repair the reputation it has acquired as a risky country to lease aircraft and engine to.” The amendments align with India’s commitment to resolving discrepancies between its national laws and global regulations, particularly within the framework of the Cape Town Convention. This move comes as India grapples with challenges in its aviation sector, exemplified by the struggles of Go First. Despite facing setbacks, the airline has been in the process of making a comeback, having been granted financial support to cover urgent liabilities. The legal disputes between Go First and its lessors have been complicated by issues such as the discovery of corrosion on some planes and missing crucial parts, adding to the turbulence in the Indian aviation industry. The recent regulatory adjustments are expected to contribute to a more stable and predictable leasing environment, benefiting both lessors and the broader aviation ecosystem in India.
