Go First: Cash-strapped airline in financial trouble The National Company Law Tribunal (NCLT) accepted Go First’s voluntary insolvency case on Wednesday. This grants protection under a moratorium from recovery by lessors and lenders for the ailing airline’s assets and leases. The start of the Corporate Insolvency Resolution Process (CIRP) was ordered by a two-member NCLT panel made up of President Justice Ramalingam Sudhakar and L N Gupta, who also stated that an interim resolution specialist will take over the airline’s management immediately.
Flights will be halted through May 19
According to news agency PTI, the NCLT court selected Abhilash Lal to serve as the airline’s interim resolution professional. It should be emphasised that the NCLT judgement has suspended the previous management of Go First. To retain the standing of the airline, the suspended management has been instructed to provide the temporary resolution specialist with the help they need. The management of Go First has also been required to deposit Rs 5 crore with IRP in order to cover costs. For Go First’s crew, the decision is also a huge relief because NCLT stated that no employees of the airline may be let go while the arbitration process is still in progress. Go First also revealed today that, for operational reasons, all of its flights will be halted through May 19. Earlier, the airline extended cancellation of flights until May 12.
First instance of an Indian airline voluntarily seeking bankruptcy protection
The NCLT’s order gives Go First, which is suffering through a serious financial crisis, a new lifeline. It might assist the budget carrier in resuming operations. However, it makes things more difficult for their overseas lessors because they won’t be able to seize the aircraft. Go First’s lessors contacted the Directorate General of Civil Aviation (DGCA) to reclaim about 45 aircraft prior to the NCLT’s ruling. Go First blamed US engine manufacturer Pratt & Whitney’s defective engines for forcing the suspension of more than half its Airbus A320neo aircraft when it sought bankruptcy protection. Pratt & Whitney rejected the airline’s allegations. Kaushik Khona, CEO of Go First, told reporters that the outcome was “historic” following the NCLT’s ruling. In order to renegotiate contracts and debt, it should be highlighted that this is the first instance of an Indian airline voluntarily seeking bankruptcy protection.
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