Rama Krishna Sangem
Go First, India’s 4th largest airline, that filed insolvency petition on May 2, is given protection of moratorium by NCLT (National Company Law Tribunal) on May 10, Wednesday. That means, the lenders, vendors and lessors of beleaguered private airline cannot press for immediately repayment of their dues. Go First, owned by Wadia family, sits on a pile of debt of around Rs 11,469 crore.
The airline with a fleet of as many as 56 airplanes, has stopped operations from May 3, and 4, and stopped fresh bookings and failed to return the advanced booking amounts to passengers. Once the airline is grounded, all debtors – lenders, vendors and lessors and travel agents – started demanding their dues. If they are allowed to have their way, Go First’s entire assets would disappear within no time.
That would also make any form of its revival just impossible. Once a running company (going concern, in the language of IBC – Insolvency and Bankruptcy Code) stops being so, all debtors will have to take heavy haircuts. Luckily, NCLT bench headed by Justice Ramalingam Sudhakar and Justice LN Gupta on Wednesday saved it from the ordeal. They provided the bankruptcy protection as sought by the airline in its petition.
Abhilash Lal is IRP
The NCLT bench appointed Abhilash Lal as the IRP (Insolvency Resoluiton Professional), who will mediate between the promoters and the debtors and stakeholders to solve the problem and try to keep the concern going.At the same time, the tribunal ordered now suspended board of directors, led by Wadias, to deposit Rs 5 crore to make immediate payments.
Go First, which came into being 17 years ago, in 2006, has blamed its crises on aircraft engines supplier, Pratt & Whitney (P&W), for selling it faulty machines that led to grounding of half of its fleet – 28,thus making it nonviable to continue normal operations. P&W and a few other debtors have filed petitions opposing any moratorium to the airline, as it would further worsen the situation. It’s to be seen how NCLT helps Go First take off from this crisis.
