India insolvency law change on leased aircraft would have to apply retrospectively -regulator

By Aditi Shah

NEW DELHI (Reuters) – Changes to Indian laws to exclude leased aircraft from assets that can be frozen during bankruptcy proceedings of an airline “would have to be considered” retrospectively, the country’s aviation regulator said in a court filing on Wednesday.

The clarification of India’s recent amendment to its insolvency law potentially paves the way for lessors of bankrupt budget carrier Go First to take back their planes.

Go First filed for bankruptcy in May but its lessors were blocked from repossessing planes due to a moratorium imposed by Indian courts. The world’s second-largest lessor, SMBC Aviation Capital, warned the move would shake the industry’s confidence at a time when India is acquiring hundreds of new jets.

In a long awaited move, India amended its insolvency law in October, a decision aimed at shoring up the financing of its fast-growing airline industry by addressing discrepancies between global and local rules.

The rule change was aimed at bringing India’s laws in line with the Cape Town Convention, a treaty protecting the rights of foreign lessors, following the dispute over the bankruptcy of Go First.

(Reporting by Aditi Shah, additional reporting by Arpan Chaturvedi; Editing by Emelia Sithole-Matarise)