The intersection of domestic insolvency laws and international aviation treaties recently took center stage during the corporate insolvency resolution process of Go Airlines (India) Limited. When the airline filed for voluntary insolvency, the National Company Law Tribunal admitted the plea on May 10, 2023, triggering a strict moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016. This legal shield effectively froze all recovery actions, preventing international lessors from reclaiming their grounded aircraft and engines.
The situation created a severe conflict between domestic insolvency procedures and international obligations under the Cape Town Convention, a treaty designed to protect the rights of aircraft lessors and financiers. The inability to repossess high value aviation assets trapped billions of dollars in capital and threatened to increase aircraft leasing premiums for all Indian carriers.
To resolve this regulatory clash, the Ministry of Corporate Affairs intervened with a landmark notification on October 3, 2023. The Central Government officially declared that the moratorium provisions under Section 14(1) of the Insolvency and Bankruptcy Code would no longer apply to transactions, arrangements, or agreements relating to aircraft, aircraft engines, airframes, and helicopters. This crucial exemption aligned Indian insolvency practices with the Cape Town Convention and its related Protocol, ensuring that aviation lessors could exercise their repossession rights even if an airline undergoes corporate insolvency.
The legal weight of this statutory notification became the deciding factor in the subsequent litigation initiated by the lessors. After months of legal battles over the trapped assets, the matter reached its conclusion at the Delhi High Court. Acknowledging the government notification and the valid termination of the lease agreements prior to the moratorium, the Court passed the order on April 26, 2024. The judgment directed the Directorate General of Civil Aviation to process the deregistration applications for all 54 grounded aircraft within five working days and facilitate their export.
This decisive legal outcome not only provided immediate relief to the stranded lessors but also restored global confidence in the commercial aviation market. By exempting aviation equipment from the blanket IBC moratorium, the legal framework now provides a predictable and secure environment for aircraft financing. The resolution of the Go First crisis serves as a vital precedent, ensuring that international leasing operations remain viable and financially sustainable for the growing domestic aviation sector.