NCLAT Rejects Go Airlines’ Petition Against the Withdrawal of Sovika Aviation Services’ Insolvency Proceedings

If certain conditions are met, the tribunal can allow a current insolvency proceeding against a corporation to be withdrawn under Section 12A of the Insolvency and Bankruptcy Code. Go Airlines can continue the legal proceedings in a commercial court.

Highlights:

  • Go Airlines previously filed a lawsuit in a commercial court and has received notice of mediation.
  • The verdict is not an expression of the views of the merits of Go Airlines’ claim.
  • Sovika Aviation provided various aircraft services to Go Airlines.

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NCLAT

The National Company Law Appellate Tribunal (NCLAT) has rejected a plea filed by budget airline Go Airlines challenging an NCLT judgement allowing Sovika Aviation Services to withdraw from insolvency proceedings. On September 23, 2021, the Mumbai bench of the National Company Law Tribunal granted the Resolution Professional’s Section 12A plea to discontinue the Corporate Insolvency Resolution Process (CIRP) against Sovika Aviation Services.

Sovika Aviation is a company that offers a variety of services to aircraft, including aircraft management, terminal management and ground handling.

After learning about the insolvency proceedings, Go Airline filed the claim on September 6, 2021. The carrier was an operational creditor of Sovika Aviation Services. On September 10, 2021, the Resolution Professional responded to Go Airlines’ claim. When the NCLT granted the application under Section 12A on September 23, 2021, the Resolution Professional was in the process of verifying the allegations.

If specific requirements are met, the tribunal can allow a current insolvency proceeding against a corporation to be withdrawn under Section 12A of the Insolvency and Bankruptcy Code (IBC). The corporation can file such an application if it has the Committee of Creditors’ (CoC’s) approval of 90% of the voting share.

The CoC had previously resolved to withdraw CIRP against Sovika Aviation Services in its seventh meeting on March 19, 2021, according to a two-member NCLAT bench.

Go Airlines Can Approach a Commercial Court for Proceedings

The tribunal went on to say that, in the case of Go Airlines’ claim, which was denied in the insolvency resolution processes, the budget carrier can always resort to suitable legal proceedings before an appropriate forum. Go Airlines previously filed a lawsuit against Sovika Aviation Services in a commercial court and has received notice of mediation.

“The fact that claim of the Appellant (Go Airlines) has not been entertained in the insolvency resolution process, there shall be no bar for the Appellant to take the appropriate legal remedy as permissible in law,” it said.

NCLAT added that the verdict to dismiss the request is not an expression of views of the merits of Go Airlines’ claim. It is for the appropriate authority to consider and make a decision in accordance with the law.

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Ria is a lead news writer at Aviation Scoop. She writes from dawn to dusk, reads in the evenings, and draws at some ungodly hours. She loathes human interaction and finds solace in the sweet, musky smell of old books, and rain.

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