NCLT Delhi admits Go First Airlines insolvency plea

The Principal Bench of the National Company Law Tribunal (NCLT) at Delhi on Wednesday admitted the application filed by Go First Airlines seeking initiation of voluntary insolvency proceedings..A coram of President Justice Ramalingam Sudhakar and technical member LN Gupta pronouced the verdict today and declared full moratorium for the company."In view of the unpaid debt subsisting above ₹1 crore and default committed towards the same, and Go Airlines being not disqualified under under section 11 of IBC, we have no other option but to admit the present application", the order states.The Tribunal appointed Abhishek Lal, backed by Alvarez and Marsel, as the interim resolution professional (IRP) till the Committee of Creditors (CoC) appoints the resolution professional.It also directed the company's suspended board of directors to co-operate with the IRP to ensure there are no layoffs.The management was also asked to deposit ₹5 crores for immediate expenses. .Go Airlines moved the NCLT earlier this month to initiate the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC).It reasoned that due to faulty engines supplied by American company Pratt & Whitney (P&W), the grounding of its aircrafts increased from 31% in 2020 to more than 50% in April 2023.They claimed that this cost the company a loss of over ₹10,800 crore..In their petition filed through Advocate Pranjal Kishore, the airline company submitted that as on date, it has paid ₹19,980 crore to its creditors. It added that a sum of ₹11,463 crore was owed to its creditors which includes banks, financial institutions, vendors and aircraft lessors.It was pointed out that as on April 28, 2023, the company had defaulted on payment of ₹1,202 crore to its creditors and ₹2,660 crore to the airport lessors..As urgent relief, Senior Advocate Neeraj Kishan Kaul appearing for Go Airlines sought for imposition of an interim moratorium to prevent lessors from taking possession of its 26 aircrafts. He reasoned that if the company loses possession of the aircrafts and the legal right to operate them, the continuance of its business will be at stake. This would impact the employment of 7,000 direct and 10,000 indirect employees as well as debt repayment to creditors, the company claimed..The coram had reserved the plea after an extensive hearing on May 4..On May 7, the airline company approached the NCLT seeking an urgent decision on its application seeking temporary moratorium.Senior Advocate P Nagesh apprised the Tribunal that aircraft lessors had initiated steps with the Directorate General of Civil Aviation (DGCA) to take possession of their aircrafts. The Tribunal assured the counsel that it would consider the request and listed the plea for pronouncement today..[Read order]