Corporate Insolvency And Financial Distress In Aviation Sector Under IBC
- IJLLR Journal
- Sep 20
- 1 min read
Sushmita, National University of Study and Research in Law (NUSRL)
ABSTRACT
This paper examines the interplay between corporate insolvency and financial distress within the Indian aviation sector, specifically in the context of the Insolvency and Bankruptcy Code, 2016 (IBC). The aviation industry in India faces unique challenges, including high operational costs, fluctuating fuel prices, intense competition, and significant reliance on leased assets, making it particularly susceptible to financial distress. The IBC, enacted to streamline and expedite the insolvency resolution process, has had a notable impact on how such distress is addressed in this sector. This study analyses key insolvency cases in the Indian aviation industry under the IBC, evaluating the effectiveness of the Code in achieving resolution, the challenges faced by stakeholders (including lessors, creditors, and employees), and the outcomes in terms of business revival or liquidation. Furthermore, it explores the specific issues arising from the international nature of aviation finance, particularly concerning aircraft leasing and the application of the Cape Town Convention. The paper also discusses recent amendments and judicial interpretations of the IBC concerning the aviation sector and proposes potential improvements to the insolvency framework to better address the sector's specific needs and ensure a more balanced approach towards all stakeholders while maintaining the going concern status of airlines where feasible.
Keywords: Corporate Insolvency, Financial Distress, Aviation Sector, Insolvency and Bankruptcy Code (IBC), Aircraft Leasing, Cape Town Convention, Resolution Process, Moratorium, Stakeholders.
