In what appears to be a major relief for Go First, the National Company Law Tribunal (NCLT) accepted Go First airlines bankruptcy protection appeal. Interestingly this is the first time that an Indian airline has voluntarily applied for bankruptcy protection to renegotiate its contracts and debt. The decision by NCLT is a saviour for the airline but has increased the woes of lessors.
The decision will help the airline in maintaining its viability. The airline might even resume commercial flights with 27 aircraft.
Commenting on the NCLT decision, Kaushik Khorana, CEO, Go First said: “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.”
Bankruptcy proceedings against Go First airline will take place as per the process stated under the Insolvency and Bankruptcy code of India, 2016. NCLT announced its order accepting the bankruptcy petition of Go First airline, under Section 10 of IBC code 2016.
The NCLT, in its order, said that an interim resolution professional will take over the airline management with immediate effect. The order also announced a moratorium on Go First's assets and leases. The moratorium order of NCLT will prevent lessors from taking back aircraft.
Jackson Square Aviation, SMBC Aviation Capital, and CDB Aviation's GY Aviation Leasing are some of the Go First lessors.
As the moratorium won't allow Go First's foreign lessors to take back their aircraft, they would end up losing their rental payments. The repossession requests will be of no consequence as the insolvency and bankruptcy process has started.
NCLT has suspended the existing board of directors and appointed Abhilaash Lal as IRP. NCLT has also directed the initiation of the Corporate Insolvency Resolution Process (CIRP) and the appointment of the insolvency resolution process (IRP). In addition to this, Go First is asked to deposit INR 50 million with IRP to meet its expenses.
In a relief to the employees the tribunal has ordered than no employee of the company will be laid off.