The Wadia Group, owner of the struggling airline, Go First, is rumoured to be pushing for a one-time settlement with banks that would involve creditors taking a “substantial haircut.” According to legal professionals quoted in the May 4 news, on the day insolvency procedures at the National Company Law Tribunal (NCLT) started, since the company has not defaulted, it would be permitted to present a resolution plan.
Instead of Sections 7 and 9, Section 10 was used to submit Go First’s Insolvency and Bankruptcy (IBC) petition. According to the research, while Section 10 permits a debtor to file for bankruptcy on its own behalf, Sections 7 and 9 permit creditors to take a debtor to NCLT to collect debts.
The promoter Wadia Group would not abandon the airline, according to Go First CEO Kaushik Khona, who stated that the insolvency plea was seeking a settlement. He claimed that they were making “every effort to manage the situation.” Khona informed the staff that Section 10 provided the best IBC relief.
The government won’t get involved because the NCLT is handling the case, according to representatives of the civil aviation ministry, but they are “keeping a close watch” on developments. On May 5, NCLT will begin hearing Go First’s petition. Bank of Baroda, Central Bank of India, Deutsche Bank, and IDBI Bank are some of its creditors, and they are due a combined total of Rs 6,521 crore. The sum owed to vendors is Rs 11,463 crore.
Go First said that half of its fleet was grounded due to a serious cash shortage and a lack of engine supplies from Pratt & Whitney on May 2, thus the company immediately cancelled all flights for three days starting on May 3. It prolonged the suspension on May 4 for an additional 10 days, beginning on May 6.
Khona claimed that the lack of engines from P&W caused the airline to ground 28 aircraft, which led to a financial crisis. Customers will receive a full refund, as promised, by Go First, which has been flying for more than 17 years. It carried about 30,000 people daily on about 180–185 flights.
