The National Company Law Tribunal (NCLT) accepted on Wednesday Go First’s insolvency plea, resulting in the airline being put under moratorium as per the Insolvency and Bankruptcy Code (IBC).
Abhilash Lal of Alvarez and Marsal were appointed as the interim resolution professional (IRP) to take charge of the airline. "The suspended Directors and ex-members of the airline should assist the IRP. An amount of Rs 5 crore should be paid to the IRP which would be adjusted later by the Committee of Creditors (CoC)," said NCLT.
The tribunal said that Go Fist’s application in the arbitral tribunal should not be affected. Go First CEO Kaushik Khona told 'Business Standard', “This is a historic ruling as an application of insolvency has been admitted so fast. The order prevents a viable airline from becoming an unviable one. The purpose of IBC has always been revival."
He also said that 27 aircraft of GO First are still functional. Go First had on Monday asked NCLT to urgently pass an order on its insolvency plea.
Senior advocate P Nagesh, appearing for Go First, then said lessors had moved an application to repossess aircraft during legal proceedings.
The airline filed for bankruptcy protection in May, blaming "faulty" Pratt & Whitney engines for the grounding of about half its 54 Airbus A320neo. In its bankruptcy application, the airline said it had cancelled 4,118 flights (serving 77,500 passengers) in the last 30 days.
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The airline said on Friday that its flight operations will remain suspended till May 12, due to "operational reasons". It first suspended flights till May 9 and suspended bookings till May 15.
The airline later told the NCLT last week that till the filing of its plea it had not defaulted on paying its financial creditors.
The airline had urged the NCLT to grant it an interim moratorium and, if that was not possible, then admit its insolvency plea under IBC.
Lessors (SMBC Capital Aviation, GAL, CDB Aviation, Sonoram Aviation Company, and MSPL Aviation), opposed the airline’s plea and said it could not ask for a moratorium even before they were heard.
The Directorate General of Civil Aviation (DGCA) on Monday issued a show cause notice to Go First, asking why its licence should not be cancelled. The regulator also requested that the airline cease all ticket sales immediately.
