The National Company Law Tribunal (NCLT) on Wednesday admitted Go First's plea for voluntary insolvency and initiate a corporate insolvency resolution process (CIRP). It appointed Abhilash Lal as the interim resolution professional (IRP) and asked him to keep the company as a going concern.
It has also put the company under protection of moratorium and directed the suspended board of directors to assist the IRP to run the company during insolvency proceedings. The banks will not be able to recover their dues during the insolvency process.
NCLT also ordered to keep the company as a going concern and ensure that no employee are retrenched.
This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate its contracts and debts.
The unprecedented move could complicate repossession efforts by lessors, which have in recent days filed requests with India's aviation regulator, the Directorate General of Civil Aviation (DGCA), for the return of about 40 Go First planes over missed rental payments.
Indian law prohibits any such recoveries once bankruptcy proceedings are initiated for a company.
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Go First's lessors include major global names such as Jackson Square Aviation, SMBC Aviation Capital and CDB Aviation’s GY Aviation Leasing.
Go First, which has been flying for more than 17 years, stopped flights from May 3 amid financial crunch caused by grounding of more than half of its fleet due to non-availability of Pratt & Whitney engines.
With liabilities worth Rs 11,463 crore, the airline has sought voluntary insolvency resolution proceedings as well as an interim moratorium on its financial obligations.
Go First has already suspended the sale of tickets till May 15.
As many as 28 planes or more than half of the airline's fleet are grounded due to the non-supply of engines by Pratt & Whitney (P&W).
The lessors of the carrier have opposed Go First's plea for an interim moratorium contending that it would have "harmful and serious consequences".
Besides, Go First is facing two more petitions seeking insolvency proceedings against it.
(With agency inputs)
