A day after the government exempted aircraft and aircraft engines from moratorium provision under the Insolvency and Bankruptcy Code, 2016, the Aviation Working Group (AWG) on Friday raised the outlook of India’s aircraft leasing compliance index.
AWG is a not-for-profit legal entity comprised of major aviation manufacturers, leasing companies and financial institutions. It includes Boeing and Airbus.
“AWG issues positive watchlist notice for India under the CTC compliance index relating to the issuance of a government notification that the general moratorium under the Insolvency and Bankruptcy Code (2016) will not apply to aircraft, aircraft engines, airframes, and helicopters transactions governed by the Cape Town Convention (CTC),” AWG said in a notification.
It said the moratorium exclusion disapplying the general moratorium provisions under IBC 2016 for CTC transactions is a material development affecting CTC compliance in India and a positive development relating to India’s CTC obligations.
AWG also said AWG continues to review the timely implementation of this new rule and calls upon the government to pass CTC primacy legislation as promptly as possible.
Under the Cape Town Convention (CTC), lessors can take back the possession of aircraft leased to airlines.
Last month, the Aviation Working Group (AWG) had 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.
India is a signatory of CTC but is yet to ratify the convention.
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.
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.
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