The NCLT (National Company Law Tribunal) has reserved its order on Go First crisis-hit airlines’ plea for seeking voluntary insolvency resolution proceedings and the interim moratorium on all financial obligations. At the same time, the aircraft lessors fiercely oppose the petition.
Amid the airline facing a financial crunch and canceling various flights, a two-member NCLT bench comprising Member L N Gupta and President Justice Ramalingam heard all the arguments for and against the petition for about four hours. A
The solicitors for Go First argue that the petition was not made with the intention of avoiding paying the debts owed to their creditors, as the aircraft lessors reject the plea, but rather that it was made to save the business.
The council also requested that the tribunal grant an interim moratorium urgently, which will help the carrier go as they are concerned and want to protect the fleet from being taken away from them by the lessors who are enforcing their contractual rights on them.
Senior-level advocates P Nagesh and Neeraj Kishan Kaul submitted that several banks of the airlines guarantee that they are being encashed and that the carrier has also been receiving notices for the aircraft termination leases.
Before the pandemic, the company had an impeccable financial record, as it had around 8 percent of the overall domestic aviation market. But as of now, the company is facing problems due to the dispute with Pratt & Whitney over the engine supply, according to them.
All of the flights operated by the Wadia Group-owned airline have been canceled through May 9, and ticket sales have been halted through May 15. The business has liabilities totaling Rs 11,463 crore. The interim moratorium that would support Go First was brought up by the bench appointed by NCLT, and Kaul responded that it would assist keep the airlines on edge.
An IRP (Interim Resolution Professional) will take over the management of the affected company as part of the insolvency resolution procedure. It will discharge its duties under the guidance of the CoC (Committee of Creditors).
Further, the bench was wondering how one IRP could run the company when on the other hand, so many professionals could not run it. Kaul responded by saying that Abhilash Lal from Alvarez & Marsal had been suggested as an IRP by the airline.
This is the same firm getting roped in by Jet Airways, which also went into insolvency proceedings in 2019. When the CIRP (Corporate Insolvency Resolution Process) was started against that specific airline, they claimed, it had more than 100 aircraft. They used Jet Airways as an example. Still, they were only left with 11 aircraft by the time they resolved.
IBC also stated that during the CIRP, the corporate debtor should have been focused on going concern rather than grounded concern, as was said by Kaul. In their petition filed by the advocate Pankaj Kishore, Go First has also sought various interim directions given by NCLT, including restraining lessors from taking back their aircraft and the airline from being subjected to any unfavorable action by the regulator DCGA.