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NCLT admits Go First's plea to initiate insolvency resolution

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Published : May 10, 2023, 12:01 PM IST

Updated : May 10, 2023, 1:09 PM IST

The budget airline on last Thursday had filed a petition with the National Company Law Tribunal (NCLT), seeking protection under bankruptcy law. It had also sought an interim moratorium to prevent the seizure of its 26 aircraft by aircraft lessors.

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New Delhi: The National Company Law Tribunal (NCLT) on Wednesday admitted Go First's voluntary plea to initiate the insolvency resolution process against the airline. A two-member bench comprising President Justice Ramalingam Sudhakar and L N Gupta also appointed Abhliash Lal as interim resolution professional (IRP) to run the debt-ridden company.

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.

Besides, NCLT also ordered to keep the company as a going concern and ensure that no employee are retrenched. In addition, the airline sought direction to appoint an insolvency resolution process (IRP) for the betterment of Go First. The NCLT, the President Justice Ramalingam Sudhakar and technical member LN Gupta announced the order, adding, "We appoint Abhilash Lal as IRP (Insolvency Resolution Professional). Suspended board of directors will cooperate with the IRP."

The NCLT court also said, "The suspended directors are also ordered to deposit Rs 5 crore to make the immediate expenses." On the moratorium sought by the airline, the court said, "The necessity of going into the merits of the application is that the Section 10 is already been admitted in respect of the corporate applicant and the moratorium is already being initiated."

According to the Insolvency and Bankruptcy Code (IBC), the effect of such an interim moratorium is that all pending legal proceedings with respect to any 'debt' are deemed to have been stayed. Crisis-hit Go First had sought various interim directions from the NCLT bench, including restraining lessors from taking back aircraft, and the Directorate General of Civil Aviation (DGCA) from taking any adverse action against the airline.

On May 4, the NCLT reserved its order after hearing the Wadia group-owned carrier and its aircraft lessors who have opposed the petition seeking interim protection.

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)

New Delhi: The National Company Law Tribunal (NCLT) on Wednesday admitted Go First's voluntary plea to initiate the insolvency resolution process against the airline. A two-member bench comprising President Justice Ramalingam Sudhakar and L N Gupta also appointed Abhliash Lal as interim resolution professional (IRP) to run the debt-ridden company.

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.

Besides, NCLT also ordered to keep the company as a going concern and ensure that no employee are retrenched. In addition, the airline sought direction to appoint an insolvency resolution process (IRP) for the betterment of Go First. The NCLT, the President Justice Ramalingam Sudhakar and technical member LN Gupta announced the order, adding, "We appoint Abhilash Lal as IRP (Insolvency Resolution Professional). Suspended board of directors will cooperate with the IRP."

The NCLT court also said, "The suspended directors are also ordered to deposit Rs 5 crore to make the immediate expenses." On the moratorium sought by the airline, the court said, "The necessity of going into the merits of the application is that the Section 10 is already been admitted in respect of the corporate applicant and the moratorium is already being initiated."

According to the Insolvency and Bankruptcy Code (IBC), the effect of such an interim moratorium is that all pending legal proceedings with respect to any 'debt' are deemed to have been stayed. Crisis-hit Go First had sought various interim directions from the NCLT bench, including restraining lessors from taking back aircraft, and the Directorate General of Civil Aviation (DGCA) from taking any adverse action against the airline.

On May 4, the NCLT reserved its order after hearing the Wadia group-owned carrier and its aircraft lessors who have opposed the petition seeking interim protection.

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)

Last Updated : May 10, 2023, 1:09 PM IST
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