India amends insolvency rules in wake of jet leasing dispute

India has amended its insolvency law to exclude leased aircraft from assets that can be frozen, a long-awaited move expected to shore up the financing of its fast-growing airline industry by addressing discrepancies between global and local rules. The rule change, disclosed in a government notice on Wednesday, aims to bring India's bankruptcy laws into line with a treaty protecting the rights of foreign lessors, following a dispute over the bankruptcy of budget airline Go First. Aircraft lessors of Go First were blocked from repossessing planes due to a moratorium imposed by Indian courts, prompting the world's second-largest lessor, SMBC Aviation Capital, to warn the decision would shake the confidence of the aviation industry at a time when India is acquiring hundreds of new jets. Wednesday's notice said some provisions of the Indian Bankruptcy Code would no longer apply to transactions in aircraft, aircraft engines, airframes and helicopters. The 2001 Cape Town Convention is designed to encourage lessors that control about half the world's fleet to rent jets to airlines in exchange for a mechanism allowing them to take back their planes relatively easily whenever airlines default. Although India signed the treaty in 2008, experts had said there was no local legislation enforcing it, putting the international framework at odds with local courts.<br/>