Go First approached the National Company Law Tribunal (NCLT) on Wednesday (May 3) and sought the admission of its insolvency plea. It owes creditors ₹11,463 crore, the airline said in its insolvency filing.
The NCLT Delhi has listed the matter for Thursday.
According to Reuters, the airline in its petition before the court said that its total liabilities to all creditors stood at ₹11,463 crore, which includes dues to banks, financial institutions, vendors and aircraft lessors. Of these, the amount owed to financial institutions stood at ₹6,521 crore.
“Currently, the assets of the company are not sufficient to meet its liabilities,” the airline said in the filing as per Reuters. On Tuesday, the airline suspended flights for three days and announced its decision to seek insolvency proceedings before the NCLT. It blamed grounding of 25 aircraft comprising 50% of its fleet due to delays in delivery of engines by Pratt and Whitney for its failure to meet its financial obligations to its creditors.
The company has defaulted on payments to operational creditors, including ₹1,202 crore to vendors and ₹2,660 crore to aircraft lessors.
The airline has said that lessors have already started repossessing aircraft. Six lessors have also invoked letters of credit issued to them by lenders.
The petition lists Central Bank of India Ltd., Bank of Baroda Ltd., IDBI Bank Ltd., Axis Bank Ltd., and Deutsche Bank, among Go First’s financial creditors.
Meanwhile, responding to Go First’s claims that its cash crunch was precipitated due to Pratt and Whitney’s failure to deliver engines, the engine maker said in a statement, “P&W is complying with the March 2023 arbitration ruling related to Go First.”
It added the airline had a lengthy history of missing its financial obligations to P&W. The Singapore International Arbitration Centre ordered P&W to provide Go First 10 engines by April 27 and another 10 by December 2023 to allow the airline to return to full operations.
When insolvency is triggered under the IBC, there can be two outcomes: resolution or liquidation. All attempts are made to resolve the insolvency by either coming up with a restructuring or new ownership plan and if resolution attempts fail, the company’s assets are liquidated.
The Tribunal has 14 days to admit or reject the application or has to provide a reason if the admission is delayed. The resolution process begins once an application is admitted. The amended mandatory deadline for the completion of the resolution process is 330 days.