The move will help the cash-strapped carrier’s attempt to revive itself, however, complicating the foreign lessors’ efforts to repossess their planes
India’s bankruptcy court National Company Law Tribunal (NCLT) on Wednesday admitted Go First’s voluntary insolvency application.
A Coram of President Justice Ramalingam Sudhakar and technical member LN Gupta pronounced the verdict today and declared a full moratorium for the company. With this, NCLT has granted GoFirst protection under moratorium from recovery by lessors and lenders.
“Keeping in mind the urgency of the case, to protect and maximise the value of the assets in line with the objectives of IBC (Insolvency and Bankruptcy Code), employment and the larger public interest involved, the petition has been admitted,” the court said.
The tribunal appointed Abhilash Lal as interim resolution professional (IRP) to run Go First till the Committee of Creditors (CoC) appoints the resolution professional. The court also directed the IRP to keep Go First as “a going concern” and not to retrench any employee.
The Indian bankruptcy court has ordered that the earlier management of Go First stands suspended. It also directed the company’s suspended board of directors to cooperate with the IRP to ensure there are no layoffs. The management was also asked to deposit Rs 5 crore with the resolution professional to meet the immediate expenses of the insolvency process.
On May 2 the Wadia group-owned Go First, filed for insolvency resolution squarely blaming US company Pratt & Whitney’s faulty engines for grounding 50 per cent of its fleet. On Monday, it urged NCLT to hasten the process and allow a temporary moratorium.
“Now since the admission order has been passed and RP is at the helm of affairs, COC will be constituted soon and thus, any settlement – which is unlikely – will have to have the nod of COC,” said Ateev Mathur, Partner, SNG & Partners.
Experts further argued the journey to revival won’t be so smooth with “too many strings that need to be tied up” to put the airline back on its feet. “Unless a prospective takeover happens, the lenders may not be willing to increase their exposure in the struggling airline,” said Ajay Monga, Partner, SNG & Partners. For any interested party to bid as a resolution applicant, the replacement of engines by P&W remains a key factor as the grounded aircraft need to become operational first and airborne, for revival of the company, he added.
