Go First, the crisis-hit airline controlled by the Wadia group, has sought voluntary insolvency resolution proceedings and an interim moratorium on its financial obligations. However, aircraft lessors have opposed the airline’s request, arguing that insolvency proceedings cannot be initiated without hearing them.
The National Company Law Tribunal (NCLT) recently heard Go First’s plea and reserved its order on the matter. The two-member bench headed by President Justice Ramalingam Sudhakar concluded the day-long hearing, during which both parties presented their arguments.
Go First’s plea for voluntary insolvency resolution comes amidst a challenging time for the aviation industry due to the ongoing COVID-19 pandemic. The airline has been struggling financially and has been unable to pay its dues to various stakeholders, including aircraft lessors.
Under the Insolvency and Bankruptcy Code (IBC), a company can initiate voluntary insolvency resolution proceedings if it is unable to pay its debts. In such cases, the company seeks to restructure its debts and operations to become financially viable again.
However, aircraft lessors have opposed Go First’s plea, claiming that they have not been given a fair hearing. They argue that the airline owes them a significant amount of money and that they should have a say in any insolvency resolution proceedings.
According to reports, Go First owes over $50 million to its lessors, who have been trying to repossess their aircraft due to non-payment of dues. The lessors claim that they have not been given a fair hearing and that the airline has been avoiding payments.
Go First, on the other hand, argues that it has been severely impacted by the pandemic and that it is unable to pay its dues due to financial constraints. The airline has been trying to negotiate with its lessors and other stakeholders to restructure its debts and operations.
If the NCLT allows Go First’s plea for voluntary insolvency resolution, the airline will be able to restructure its debts and operations under the supervision of a resolution professional. During this time, an interim moratorium will be placed on the airline’s financial obligations, which will give it some breathing space to reorganize.
However, if the NCLT rejects Go First’s plea, the airline will be in serious trouble, as it will not have any legal protection against its creditors. This could lead to the airline being liquidated, which would be a significant blow to the Indian aviation industry.
The aviation industry in India has been severely impacted by the pandemic, with many airlines struggling to stay afloat. The government has announced various measures to support the industry, including providing financial assistance and allowing airlines to operate at full capacity.
However, the situation remains challenging, and many airlines, including Go First, are still struggling to survive. The outcome of the NCLT’s order on Go First’s plea for voluntary insolvency resolution will have significant implications for the Indian aviation industry and its stakeholders.