MC: This Jet Airways aircraft lease pits Indian bankruptcy code against international ones

2 July 2019: The aircraft is owned by a leasing company in Delaware, US. Its operator is Jet Airways, which suspended operations in April and is now facing insolvency proceedings. But the plane itself has been seized by Dutch authorities, where a claim has been made on it.

If that is not complicated, the lessor has now put in an application at the Directorate General of Civil Aviation (DGCA), the Indian aviation regulator, to de-register the aircraft.

Once de-registered, the lessor can take the plane out of India and lease it to another airline. But then, will the DGCA allow it?

While it would have been a routine affair earlier, now that Jet Airways is at the National Company Law Tribunal (NCLT), the de-registration may not be immediately possible.

“The NCLT moratorium disallows any recovery of any asset from the company when the resolution process is on,” said a prominent aviation lawyer.

“It is a true conflict of Cape Town treaty Vs India insolvency law Vs Dutch insolvency law,” added the lawyer.

The aircraft

The aircraft in question is the Boeing 777-300ER. While it is owned by Delaware Aircraft lease, the plane was leased by Dublin-based Fleet Ireland Aircraft, and operated by Jet Airways.

The DGCA has already de-registered about 100 Jet Airways’ aircraft. The airline had a fleet of about 120 aircraft before the crisis began and led to the suspension of operations. At present, the lenders have taken it to the NCLT, where the next hearing is slated for July 5.

But even before the airline went to insolvency tribunal in India, bankruptcy proceedings were filed against the company in Dutch courts in May. The courts, which have already declared the Indian airline bankrupt,  want to take possession of the aircraft, sell it and pay off dues to leasing companies and local Jet Airways employees.

The aircraft is parked in Amsterdam’s Schiphol airport.

The aircraft though is said to be financed by EXIM Bank of the US, which wants to repossess its ‘asset’ after Jet Airways defaulted on interest payment. According to the Cape Town treaty, the owner must get the aircraft, in any situation, said the lawyer cited above.

The treaty became effective in 2006, and India is one of the contracting parties. The treaty sets international standards on contracts and leases and offers legal remedies. But it is unclear how it will apply with India’s insolvency and bankruptcy code.

The moot question is this –  Can the DGCA de-register the aircraft when the insolvency proceedings are on in NCLT?

Moneycontrol reported

Categories: General News, India Bankruptcy

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