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Big relief for Go First as NCLT admits voluntary insolvency plea


Mangalore Today News Network

New Delhi, May 10, 2023: Cash-strapped airline Go First’s voluntary insolvency plea was accepted by the National Company Law Tribunal (NCLT) on Wednesday.

With this, the embattled airline’s assets and leases have been granted protection under a moratorium from recovery by lessors and lenders.

 

Go first


A two-member NCLT bench comprising President Justice Ramalingam Sudhakar and L N Gupta directed the initiation of the Corporate Insolvency Resolution Process (CIRP) and added that an interim resolution professional will take over the management of the airline with immediate effect.

The NCLT bench appointed Abhilash Lal as the interim resolution professional to run the airline, reported news agency PTI. It may be noted that the earlier management of Go First stands suspended after the NCLT order.

However, the suspended management has been directed to extend necessary support to the interim resolution professional to maintain the status of the airline. Go First’s management has also been asked to deposit Rs 5 crore with IRP to meet expenses.

The order also comes as big relief for Go First’s employees as NCLT said none of the airline’s staff can be laid off as long as the arbitration process continues.

Meanwhile, Go First also announced today that its flights will remain suspended till May 19 due to operational reasons. Earlier, the airline had extended flight cancellations till May 12.

Go First gets fresh lifeline


The NCLT’s order provides a fresh lifeline to Go First, which is going through a severe financial crisis. It could help the low-cost carrier revive operations. However, it complicates the situation for its foreign lessors as they will not be able to repossess planes.

Before NCLT’s verdict, Go First’s lessors had approached the Directorate General of Civil Aviation (DGCA) to repossess around 45 planes.

While filing for bankruptcy protection, Go First blamed US engine maker Pratt & Whitney’s faulty engines that led to the grounding of over half its fleet of Airbus A320neos. Pratt & Whitney has dismissed the airline’s claims.

After NCLT’s verdict, Go First’s CEO Kaushik Khona told reporters that the decision was "historic". It may be noted that this is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate contracts and debt.


Courtesy: India Today


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