Go First gets relief: NCLT accepts plea for bankruptcy protection; no lay-offs
The National Company Law Tribunal granted Go First protection against recovery by lessors and lenders, after it became the first Indian airline to seek voluntary insolvency.
The National Company Law Tribunal (NCLT) has admitted Go First’s plea for voluntary insolvency and granted from recovery by lessors and lenders protection under moratorium.
At a hearing in New Delhi on Wednesday, the principal bench of NCLT ordered the initiation of the corporate insolvency resolution process and the appointment of an Insolvency Resolution Professional (IRP)—Abhilash Lal of Alvarez and Marshal. While directing the IRP to maintain the status of the airline as a going concern, the NCLT directed the Go First management to deposit Rs 5 crore with the IRP to meet their expenses.
The order also directed the suspension of the existing management, with a stipulation that the outgoing management extend all support necessary to the IRP. It also said that no employee was to be laid off. The IRP will pursue the necessary arbitration proceedings with engine maker Pratt & Whitney.
Go First has been pressing for a moratorium to restrain lessors from taking back its aircraft so as to allow the airline to continue operations. The airline filed for voluntary bankruptcy under Section 10 of the Insolvency and Bankruptcy Code (IBC), seeking a moratorium and the appointment of a resolution professional.
The airline cited a failure by engine supplier Pratt and Whitney to provide engines as the reason for the move. The airline also revealed that some of its lessors had moved to terminate lease agreements and requested the Directorate General of Civil Aviation (DGCA) to de-register the aircraft.
Go First has also moved a US court to enforce pending emergency arbitration orders on Pratt & Whitney. Earlier, a Singapore-based emergency arbitrator had directed Pratt & Whitney to supply 10 engines by April and another 10 by December 2023.
This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate its contracts and debts.
The Directorate General of Civil Aviation (DGCA) has received new requests from lessors to de-register nine more aircraft. With requests for thirteen aircraft made on May 8 and 23 on May 4, the total aircraft de-registration requests stand at 45.
The DGCA had issued a show cause notice to the airline under the relevant provisions of the Aircraft Rules, 1937, for its failure to continue operations safely, efficiently, and reliably.