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April 17, 2024

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India-based airline Go First, which stopped all its flight operations in May last year, has a lease of life for another 60 days to be able to find a buyer and take to the skies again.

On Tuesday, the National Company Law Tribunal (NCLT) extended the Corporate Insolvency Resolution Process (CIRP)  going on against Go First by 60 days. NCLT is a quasi-judicial body in India adjudicating issues related to Indian companies.

The latest extension for Go First comes after the Resolution Professional (RP) told NCLT that three parties had shown an interest in the grounded Indian carrier.

The RP told NCLT that all three parties had deposited earnest money after submitting their expression of interest. Hence, the airline’s lenders voted to extend the CIRP. According to the RP, these three parties are expected to submit their resolution plan to revive the airline by February 15.

SpiceJet, the Delhi-based low-cost airline that has raised over Rs 22 billion recently, is among the three entities interested in reviving Go First.

Sky One from Sharjah and Africa-focused Safrik Investments have also shown interest, apart from SpiceJet, and have taken formal steps towards acquisition by submitting the necessary bank guarantees. Earlier, Jindal Power, promoted by Indian billionaire Naveen Jindal, had shown an interest but withdrew from the fray after going through Go First’s financials.

If a resolution can be firmed up in the next 60 days, then Go First can fly again. Otherwise, liquidation will be the only option. This is because CIRP has to be completed in 330 days, which ends in April this year.

The Insolvency & Bankruptcy Code (IBC) mandates completion of CIRP within 330 days, which includes the time taken during litigations. However, the maximum time CIRP must be mandatorily completed, including any extension or litigation period, is 330 days, failing which the corporate debtor is sent for liquidation.

On May 2, last year, Go First filed a plea in NCLT under Section 10, asking to be admitted to the Corporate Insolvency Resolution Process. The NCLT admitted the plea on May 10.

In a statement issued on May 2 last year, the airline said it had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney, which had resulted in the grounding of 25 aircraft (equivalent to 50 percent of its Airbus A320neo aircraft fleet) as of 1 May last year.

Today’s order extending the moratorium is not an unexpected order but all it does it continue the shameful happenings which this Go First case has caused. The whole world is watching this debacle unfold which is most unfortunate for India in general. While the Honourable NCLT is well within its power to do so, the CoC and others are looking at this myopically and without regard for the aviation industry as a whole. The aircraft assets are reaching a dangerous level of disrepair and the lessors pockets are already likely to be seriously burned once they get possession back. All eyes turn to the Honourable High Court for any justice in this matter for the lessors, who Go First has survived off since its inception.” said Nitin Sarin, Managing Partner, Sarin & Co.

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Former Senior Deputy Editor at Business Line (aka The Hindu Business Line)

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