Home  »  Business News

Navigating Turbulence: Go First’s Quest for Revival Amidst Insolvency Challenges

4th February, 2024| By Business Desk
Go Air - Go First
Go Air/Go First | Credit: Creative Commons
  • The grounded airline, Go First, formerly GoAir, is seeking a 60-day extension for its insolvency resolution process, with legal experts anticipating approval from the National Company Law Tribunal (NCLT).
  • Facing financial challenges since filing for bankruptcy protection in May 2023, Go First has encountered hurdles, including the failure to present a viable revival plan and administrative challenges in the NCLT.
  • With the initial 90-day extension expiring, the impending 60-day extension is crucial, representing a final opportunity for Go First to devise a revival strategy within the 330-day limit mandated by the Insolvency and Bankruptcy Code.
  • Aircraft and engine lessors, seeking repossession of their assets, may face further delays due to the extension. Recent government notifications exempting aircraft transactions from the moratorium provide lessors with a strengthened position.
  • Despite expressions of interest from potential buyers like SpiceJet promoter Ajay Singh, Sky One, and Busy Bee, the absence of a concrete resolution plan leaves Go First’s future uncertain, emphasizing the challenges in meeting regulatory requirements and satisfying stakeholders.

Go First, formerly known as GoAir, is currently in the throes of its insolvency resolution process, seeking a 60-day extension to navigate the complexities of its financial challenges. The National Company Law Tribunal (NCLT) initially granted a 90-day extension, which concluded on February 4, and legal experts anticipate that an additional 60 days may be secured. This extension is crucial for the grounded airline as it endeavors to devise a viable revival plan and potentially attract investors.

Go First initiated its insolvency resolution process in May 2023, attributing its financial predicament to Pratt & Whitney engine failures. Despite initial efforts, the airline faced obstacles in presenting a workable revival plan, leading to the first 90-day extension granted by the NCLT. With the expiration of this extension, the airline has completed 270 days of the stipulated corporate insolvency and resolution process (CIRP). The Insolvency and Bankruptcy Code mandates the completion of CIRP within 330 days, and an extension beyond this period may only be granted under exceptional circumstances.

The resolution professional overseeing Go First’s insolvency process is reportedly preparing to approach the NCLT to request the additional 60-day extension. Legal experts opine that such an extension, if within the overall 330-day limit mandated by the Insolvency and Bankruptcy Code, is likely to be approved. This extension represents a final opportunity for Go First to devise a comprehensive revival strategy within the regulatory framework. However, legal experts also acknowledge that, in exceptional cases, the NCLT has the authority to grant extensions beyond the 330-day limit, underscoring the complexities inherent in insolvency proceedings.

The fate of Go First hinges on its ability to navigate these challenges and formulate a plan that satisfies the regulatory requirements while addressing the concerns of creditors and lessors. The latter, comprising aircraft and engine lessors, have been vocal about their plight, seeking repossession of their assets in both the NCLT and the Delhi High Court. The potential delay caused by the sought-after extension could further exacerbate the financial strain on these lessors.

A recent government notification, exempting transactions related to aircraft from the moratorium, has strengthened the lessors’ case. They are no longer compelled to await the conclusion of the moratorium period or the insolvency process to repossess their aircraft. This development provides the lessors with a more robust position, alleviating some of the challenges posed by the extended grounding of their assets.

In the absence of a concrete resolution plan, Go First has attracted interest from various potential buyers. Entities such as SpiceJet promoter Ajay Singh, Sharjah-based aviation company Sky One, and Busy Bee have submitted a Rs 5-crore bank guarantee and a formal expression of interest to take over the beleaguered airline. This interest injects a glimmer of hope into Go First’s otherwise uncertain future. However, it remains to be seen whether these potential buyers can navigate the intricacies of the insolvency resolution process and formulate a plan that aligns with the regulatory framework and meets the expectations of creditors and lessors.

As the insolvency proceedings unfold, stakeholders, including lessors, potential buyers, and the wider aviation industry, await the NCLT’s decision on the sought-after 60-day extension. The resolution professional faces the arduous task of balancing the interests of all stakeholders to prevent the airline from being pushed into liquidation if a realistic prospect of revival exists. The unfolding developments in Go First’s insolvency resolution process underscore the challenges inherent in navigating the intricacies of the regulatory framework, creditor expectations, and the economic impact on lessors and the aviation industry at large.