NCLT Grants Go First's Request For Moratorium And Insolvency Proceedings

The NCLT on 10 May, approved Go First's request for a moratorium on recovery by lessors and lenders, providing the company with protection.

NCLT, in its judgement, said that "we admit the plea of Go Airlines for insolvency proceedings." A two-member panel made up of President Justice Ramalingam Sudhakar and L N Gupta has named Abhliash Lal as an interim resolution professional (IRP) to manage the indebted corporation.

Additionally, it has placed the business under a moratorium of protection and ordered the suspended board of directors to pay 5 Crores to cover urgent expenses.

The National Company Law Tribunal (NCLT) has received a request for voluntary insolvency resolution proceedings from Go First. In order to declare itself insolvent, it filed a petition under Section 10 of the Insolvency and Bankruptcy Code.

Additionally, NCLT mandated that the business remain open for business and that no employees face layoffs.
After the NCLT order, Go First CEO Kaushik Khona said, "This is a historic ruling as an application of insolvency has been admitted so fast. The order prevents a viable airline from becoming an unviable one. The purpose of IBC has always been revival."

The Wadia group-owned carrier and its aircraft lessors, who had opposed the plea for temporary relief, were heard on May 4 by the NCLT, which then reserved its decision.

Go First, a company that has been in the air for more than 17 years, ceased operations on May 3 due to a financial crisis brought on by the grounding of more than half of its fleet due to the unavailability of Pratt & Whitney engines.

The airline has requested voluntary insolvency resolution procedures and an interim moratorium on its financial commitments due to liabilities of 11,463 crore. In other news, the airline has extended the suspension of ticket sales to May 19.

Pratt & Whitney's (P&W) failure to supply engines has grounded as many as 28 aircraft, or more than half of the airline's fleet. Go First's request for an interim moratorium has been rejected by the lessors of the carrier, who claim it would have "harmful and serious consequences." Additionally, Go First is dealing with two other petitions that ask for insolvency proceedings to be initiated.