Supposing you are running a business that has taken some things on lease from some vendor. Your business runs into loss, it has a mountain of debt, including the rent, lease charges that you have to pay to the vendor from whom you have taken things on lease. For example, if you are running a software development business and hire 20 computers for your team of developers and your enterprise fails and fails so badly that you have to declare bankruptcy and seek resolution under the Insolvency and Bankruptcy Code, the vendor who has supplied you computers can no longer take them away even if they are his property!
This is what happened in the case of airlines that were going bankrupt.
The latest case is of GoAir. It has filed for voluntary insolvency. It has some of its own jets but most of the fleet is on lease from vendors.
Under the IBC process, the leasing companies can’t take back their jets even when the jets are their property and even when the airline owes them money.
Somehow all debtors to the company get a say in the disposal of jets which were never the property of the airline to start with!
This is such a glaring loop hole. Now the government has woken up to this problem and is formulating a solution.
Actually the solution is quite simple, the leased assets, be it anything, should never form part of assets of the company. They are actually a liability and should be treated as such.
