CoC decided to liquidate airline: Bankrupt airline Go First RP to NCLT | News
The resolution professional (RP) of bankrupt airline Go First told the National Company Law Tribunal (NCLT) on Tuesday that its committee of creditors (CoC) had unanimously decided to liquidate the company after lucrative bids failed to materialise.
The tribunal has now sought a response from the suspended management of the airline regarding the liquidation plea filed by the RP. The case will come up again on October 4.
Senior advocate Ritin Rai, appearing for the RP, said the CoC, comprising the Central Bank of India, Bank of Baroda, IDBI Bank, and others, had decided on liquidation.
He, however, said that the company is still fighting US-based engine maker Pratt & Whitney (P&W) in the arbitration proceedings in Singapore.
Lenders to the airline have appointed Burford Capital, a US-based litigation finance firm, to bankroll the arbitration case against engine maker P&W. Burford will provide $20 million in the first tranche to support the case.
Go First said it is seeking $1 billion from P&W, which, if awarded, will be used to distribute funds to the lenders and facilitate the liquidation process.
However, the NCLT asked the RP about the course of action if the arbitration case fails. The court also asked the RP to explain how the money from the arbitration case will be distributed.
The resolution professional said the lenders had already spent about Rs 200 crore to fund litigation since the company filed for insolvency and were unwilling to release additional funds for further litigation in the Singapore arbitration case.
The tribunal expressed its reservations about third-party funding, saying it cannot be allowed. However, the RP disagreed, citing a Supreme Court judgment.
The Delhi High Court had on April 26 directed the civil aviation regulator to deregister planes leased to Go First within five working days, and the Directorate General of Civil Aviation (DGCA) on May 1 deregistered all 54 aircraft leased to Go First. The airline thus lost all 54 of its aircraft.
Go First did not challenge the Delhi High Court order. The lenders of the airline include the Bank of Baroda, the Central Bank of India, and IDBI Bank.
Go First filed for voluntary insolvency on May 2, 2023, under Section 10 of the Insolvency and Bankruptcy Code (IBC), and on May 10, 2023, the NCLT admitted its insolvency plea. It is on its last leg of extension from the NCLT to complete its insolvency process.
First Published: Sep 03 2024 | 8:08 PM IST
