Go First Airline’s lenders are seeking full control of the carrier’s resolution process at the National Company Law Tribunal (NCLT). So far the committee of creditors (CoC) has replaced the interim resolution professional (IRP) and is now also looking to replace the process and legal advisors appointed by NCLT.
According to the submission made to the NCLT, Go First owes Rs 6,521 crore to its creditors. The airline also has outstanding payments to vendors, bringing the total amount owed to Rs 11,463 crore.
The Economic Times reported that the Central Bank of India leads the list of creditors, with more than Rs 6,500 crore owed. Other major lenders include Bank of Baroda (Rs 1,430 crore) and Deutsche Bank (Rs 1,320 crore).
The Directorate General of Civil Aviation (DGCA) has instructed Go First to present a plan for resuming its services, subject to approval by the CoC. The plan had to be approved by the CoC before the aviation regulators could consider it.
Abhilash Lal had been appointed as the IRP for Go First on May 9 by the NCLT and had even submitted a six-month revival plan to the aviation regulator. Lal proposed that Go First could resume operations using its 26 operational aircraft and 400 pilots.
However, in the first meeting on Friday, June 9, Go First’s lenders discussed the airline’s revival plan and replaced the IRP with Shailendra Ajmera from EY as the resolution professional.
The CoC also replaced the process advisor, and legal agency to assert control over the country’s largest voluntary bankruptcy-protection case since the Insolvency and Bankruptcy Code (IBC) was enacted.
According to ET, CoC intends to replace A&M with EY as the process advisor and bring in J Sagar Associates as the legal advisor to the CoC. Trilegal, the IRP’s legal advisor, will also be replaced.
To avoid any conflict of interest, advisors or firms previously associated with the promoters or management are being excluded, added the report.
According to the same report, since the voluntary insolvency filing by the airlines allows a moratorium on loan repayments, lenders want to ensure that they can maintain control over the process.
Furthermore, lenders are concerned about delays in restarting the airline, as it could erode public trust and lead to key employees leaving for rival airlines.
Before providing interim funding, banks are also seeking approval from the DGCA to ensure that the released funds are not wasted.
So far, lenders have rejected requests from the airline management to release unused funds.
However, ET reported that with complete control over the resolution plan and assurance from the aviation regulator, the lenders may reconsider.
