Go First Airlines Requests To Initiate Voluntary Insolvency Proceedings Against Itself

On Thursday, the National Company Law Tribunal's Principal Bench in Delhi heard an application by Go First Airlines. The airline company requested to initiate voluntary insolvency proceedings against itself, and the bench, comprising President Justice Ramalingam Sudhakar and technical member LN Gupta, reserved orders on the matter. During the hearing, the company also requested an interim moratorium. Go First Airlines moved the NCLT under the Insolvency and Bankruptcy Code (IBC) to declare bankruptcy and start the corporate insolvency resolution process.

The company that owns Go First Airlines declared bankruptcy and initiated the corporate insolvency resolution process by moving the NCLT under the Insolvency and Bankruptcy Code (IBC). 

During the hearing, Advocates appearing on behalf of the airline contended that the company had suffered considerable losses due to the rising number of grounded aircraft. One of the Advocates urged for an interim moratorium to prevent the lessors from taking control of the 26 aircraft, which posed a threat to the company's capability to function, resulting in a risk to the employment of 7,000 direct and 10,000 indirect employees, as well as the repayment of debts to creditors. However, the Tribunal appeared doubtful about granting such a request as it found no provision under the IBC to provide such relief.

The Bench reserved the plea for orders after hearing Go First Airlines for over three hours. The airline contended that the grounding of its flights was due to persistent and recurring problems with engines provided by the American company, Pratt & Whitney (P&W). The grounding of aircraft increased from 31% in 2020 to over 50% in April 2023, resulting in a loss of over ₹10,800 crore. Go First Airlines also issued a statement on Twitter, announcing a temporary suspension of all flight operations between May 3 to 5, 2023, due to the faulty engines and the additional impact of COVID-19. 

Go First Airlines requested monetary aid from banks and financial institutions through the emergency credit line guarantee scheme to mitigate their losses. The airline had defaulted on paying lease rentals to the airport and received notices for payment and termination. Go First Airlines owed a total of ₹11,463 crore to its creditors, including banks, financial institutions, vendors, and aircraft lessors. As of April 28, 2023, the airline had defaulted on payment of ₹1,202 crore to its creditors and ₹2,660 crore to the airport lessors.