New Delhi, May 10 (PTI) In a major relief for crisis-hit Go First, the National Company Law Tribunal (NCLT) on Wednesday admitted its plea for voluntary insolvency resolution proceedings and declared a moratorium under the insolvency law.
The ruling means that lessors are barred from taking back aircraft and creditors are restrained from taking coercive action.
The tribunal’s ruling, which was reserved on May 4, caps more than a week of uncertainty for the crisis-hit carrier, which has more than 7,000 employees on its rolls, and also comes against the backdrop of lessors moving to deregister at least 45 planes of the airline.
Besides, the Interim Resolution Professional (IRP) Abhilash Lal — who will be in charge of the affairs of the airline as the board has been suspended — has been directed not to retrench any employees.
Go First CEO Kaushik Khona described the NCLT’s decision as a “landmark judgement” that is very timely and effective for its revival.
However, aircraft lessor SMBC Aviation Capital has challenged the NCLT ruling before the National Company Law Appellate Tribunal (NCLAT), which is scheduled to hear the petition on Thursday.
The cash-strapped Go First, which has not been flying since May 3, on Wednesday said flights have been cancelled till May 19 due to operational reasons.
Allowing the airline’s insolvency resolution plea, a two-member NCLT bench said there is existence of unpaid debt and default committed by Go First above the limits under the Insolvency and Bankruptcy Code (IBC).
While noting that the carrier has placed on record the demand notices issued by the creditors, which is not even disputed by its representing lessors, the tribunal said it has no other option but to admit the present application “under Section 10 of the Insolvency & Bankruptcy Code (IBC)”.
The order was passed by the bench headed President Justice Ramlingam Sudhakar.
With liabilities worth Rs 11,463 crore, the airline filed for voluntary insolvency resolution proceedings on May 2. It had said that the grounding of aircraft due to the non-supply of engines by Pratt & Whitney (P&W) had resulted in financial woes.
On Wednesday, P&W said it is pursuing its own legal recourse against budget airline Go First’s claims.
Meanwhile, the NCLT has also provided protection to the debt-ridden carrier by declaring a moratorium as per the provisions of IBC.
Following this moratorium, Go First is now protected from any suits or continuation of pending suits or proceedings against it, including the execution of any judgment, decree or order in any court of law, tribunal, or arbitration panel till the completion of the insolvency proceedings.
Moreover, the tribunal has also restrained transfer, encumbrance, alienating, or disposing of its assets and any action to foreclose, recover or enforce any security interest created by the airline in respect of its property.
The insolvency tribunal has appointed Abhilash Lal as Interim Resolution Professional (IRP) as suggested by Go First and “directed to take charge of the CIRP of the corporate debtor with immediate effect”.
CIRP refers to Corporate Insolvency Resolution Process.
The tribunal further ordered the suspended board of directors and ex-management of Go First to “extend all necessary support and cooperation to the IRP and his team in keeping Go First ‘a going concern’ and running its operations/services smoothly”.
It also directed the suspended management “to deposit Rs 5 crore with the IRP to meet the immediate expenses”.
“The IRP will ensure to take all necessary steps including the execution of the arbitral award to keep the corporate debtor as a going concern and run its services smoothly,” it said.
Besides, the NCLT also directed IRP to ensure that retrenchment of employees is not resorted to as a matter of course. “In any event, any such decision/event should be brought to the attention of this adjudicating authority,” it said.
Meanwhile, travel agents’ grouping TAAI on Wednesday said it will consider moving the NCLT against Go First in case the airline does not provide a viable solution to clear its dues estimated to be worth around Rs 900 crore. PTI KRH IAS RAM MR
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