Go First asks National Company Law Tribunal for moratorium after facing severe cash crunch
Posted Date – Friday, 05/05/23 at 12:15pm
New Delhi: Embattled Wadia Group airline Go First sought a temporary stay from the National Company Law Tribunal (NCLT) here on Thursday after facing a severe cash crunch.
The airline is also seeking direction to appoint an insolvency resolution procedure (IRP) to improve Go First.
NCLT has reserved an order on Go Airlines’ request after the hearing.
The effect of this temporary stay under the Insolvency and Bankruptcy Code (IBC) is that all pending legal proceedings in relation to any “debt” are deemed to be stayed.
“We are retaining the order,” said the two judges of NCLT in the Delhi office, headed by Justice Ramalingam Sudhakar and a technical member LN Gupta.
Crisis-ridden Go First had sought various interim directions from NCLT judges, including restrictions on lessors repossessing planes, and regulator Directorate General of Civil Aviation (DGCA) from
Take any adverse action against the airline.
It is worth noting that the airlines under the Wadia Group have liabilities of around Rs 11,000 crore.
Senior lawyer Neeraj Kishan Kaul representing Go First Airlines said the company has filed a Section 10 petition under the IBC (Insolvency and Bankruptcy Code). Every condition is met. In April 2023, Promoter has invested about Rs 2.9 crore.
“The goal of the IBC is to make sure that a company has some continuity, not stagnation,” Kaul told NCLT.
During the hearing, Kaul petitioned the NCLT court that the company has room to recover and asked for the temporary stay order to be granted. The airline also admitted it was going through a huge financial crisis.
Kaul also told the NCLT bench that lenders were freezing accounts and lessors were terminating agreements. With the fundamentals in place, there’s plenty of room for a revival.
Go First Airlines further told the NCLT bench that it is there (at NCLT) because of the engine supplier, otherwise, it has an impeccable financial track record in every respect.
“The purpose of the IBC is recovery and there is no financial default by design at all. Lenders are freezing accounts, lessors are terminating agreements, and Go Airlines told the NCLT bench to seek appropriate directions and orders regarding the issues it faces,” Kaul said.
Go First has further sought direction from NCLT to provide interim relief in the form of a temporary stay if NCLT does not recognize the request today.
Go First said its bank account with the consortium had been frozen and asked the NCLT court to unfreeze its bank account.
Go First Airlines said it was not a case of malicious petitioning to evade dues.
According to a petition filed with NCLT, the budget airline has sought directions to limit any recovery actions by aircraft lessors and adverse actions by DGCA and suppliers of essential goods and services.
Another request is that DGCA, Airports Authority of India (AAI) and private airport operators should not cancel any departure and parking slots allocated to the company.
However, lessors of the aircraft opposed the airline’s demands, saying bankruptcy proceedings could not be started without their views being heard.
