India's Go First lenders are contesting a measure that would allow lessors to retrieve aircraft

 India's Go First lenders are contesting a measure that would allow lessors to retrieve aircraft

India changed its legislation this month to remove leased airplanes from the list of assets that may be blocked when filing for bankruptcy.

According to four persons with direct information, the lenders of the Indian airline Go First, which is now grounded, want to legally contest the aviation watchdog's interpretation of revisions to bankruptcy legislation that might enable lessors to retroactively make adjustments and perhaps regain aircraft.

India changed its legislation this month to remove leased airplanes from the list of assets that may be blocked when filing for bankruptcy.

In response to concerns expressed by Go First lessors over their inability to retrieve their aircraft, the Directorate General of Civil Aviation said in a court document that the new laws will take effect retroactively, providing comfort to the lessors.

However, the sources said that Go's lenders, to whom the airline owes $783 million, are worried that releasing the grounded airline's aircraft would cause its worth to further decline, which might discourage bidders and jeopardize their ability to collect their money.

The sources claimed that because Go was already protected by bankruptcy when the legislation was changed, they want to argue before a Delhi High Court judge that the amendments to the bankruptcy code should take effect immediately rather than retroactively.

The airline's worth will decline in the absence of the aircraft. One banker at a state-run bank with exposure to the airline said that the new legislation seemed to have discouraged bids already.

The continuing issue between lessors and Go First is scheduled to be heard by the Delhi court on Friday.

If the court grants the lenders' request, lessors would suffer and more than fifty Go First Airbus aircraft will remain grounded in India.

ACG Aircraft Leasing and Dubai Aerospace Enterprise Capital had earlier informed the court that several of their aircraft were corroding and that some of its components had reportedly vanished.

Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank are listed as creditors in the Go First bankruptcy case.

Jindal Power expressed interest in Go First, according to Reuters last month. The four sources said that November 21 is the deadline for bids on the airline.