The National Company Law Tribunal (NCLT) in its judgement on Wednesday admitted the plea of Go First Airlines for insolvency proceedings.
The budget airline on last Thursday had filed a petition with the National Company Law Tribunal (NCLT), seeking protection under bankruptcy law. It had also sought an interim moratorium to prevent the seizure of its 26 aircraft by aircraft lessors. In addition, the airline sought direction to appoint an insolvency resolution process (IRP) for the betterment of Go First.
The NCLT, the President Justice Ramalingam Sudhakar and technical member LN Gupta announced the order, adding, “We appoint Abhilash Lal as IRP (Insolvency Resolution Professional). Suspended board of directors will cooperate with the IRP.”
The NCLT court also said, “The suspended directors are also ordered to deposit Rs 5 crore to make the immediate expenses.”
On the moratorium sought by the airline, the court said, “The necessity of going into the merits of the application is that the Section 10 is already been admitted in respect of the corporate applicant and the moratorium is already being initiated.”
According to the Insolvency and Bankruptcy Code (IBC), the effect of such an interim moratorium is that all pending legal proceedings with respect to any ‘debt’ are deemed to have been stayed.
Crisis-hit Go First had sought various interim directions from the NCLT bench, including restraining lessors from taking back aircraft, and the Directorate General of Civil Aviation (DGCA) from taking any adverse action against the airline.
The Wadia Group-owned airline has liabilities worth around Rs 11,000 crore.
Go First said that its bank account with the consortium is frozen, and it pleaded to the NCLT Court to defreeze its bank account.
Go First Airlines said that this is not a case of a malicious petition to avoid payment of dues.
According to the petition before the NCLT, the budget airline sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions.
The budget airline also announced on Wednesday that due to operational reasons, flights until May 19 are cancelled. It also said a full refund will be issued to the original mode of payment shortly.
The airline also said it was committed to provide all the assistance it can.