Lenders are likely to conduct a forensic audit of cash-strapped Go First Airlines accounts to check if there has been any diversion of funds. The organization has been under insolvency resolution for a month as it filed for bankruptcy protection.
The banker, who asked to remain anonymous, said that despite meeting with Go Airlines management to learn why it unilaterally filed for bankruptcy. Moreover, the lenders haven’t received a satisfactory response. Most banks were shocked when the airline approached the National Company Law Tribunal (NCLT) in May despite not defaulting on payments, despite some who had anticipated impending stress.
The National Company Law Tribunal (NCLT), Delhi bench, received a voluntary insolvency resolution proceeding filing from the Wadias-promoted airline on May 2 and accepted it on May 10.
Transaction audits are conducted in accordance with the provisions of the bankruptcy code because the resolution professional must determine whether any transactions are preferential, undervalued, fraudulent, or extortionate before reaching a conclusion. Banks conduct independent forensic audits to ascertain whether transactions contravene loan terms or Reserve Bank of India (RBI) regulations.
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Speaking of, the insolvency application of the organization said that it is in debt and owes financial creditors, Deutsche Bank, Bank of Baroda, Central Bank of India and IDBI Bank, Rs 6251 crore ($798 million) as on April 28, 2023.
On June 15, NCLT gave the Committee of Creditors (CoC) approval for the appointment of Shailendra Ajmera of EY as the debt-ridden airline’s resolution professional (RP). Earlier, on the airline’s recommendation, the NCLT appointed Abhilash Lal as the interim resolution professional (IRP), who was supported by Alvarez and Marsal. According to the banker cited above, lenders requested the change because they think EY is better equipped than Alvarez to turn around aviation companies.
Also Read: Direct Tax Collections Surge to Rs 3.8 Lakh Crore, Marking an Impressive 11.2% YoY Growth
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