Go First Admitted To Insolvency
The National Company Law Tribunal has admitted Go First into insolvency, directs IRP to ensure no lay offs take place.
The Delhi bench of the National Company Law Tribunal has admitted Go First into insolvency. The tribunal imposed a moratorium and appointed Abhilash Lal from Alvarez & Marsal as the interim resolution professional.
The bench noted that the threshold for admission—over Rs 1 crore unpaid debt and default—is met. It admitted the insolvency petition pointing out the urgency of the case, to protect and maximize the value of the assets, employment and the larger public interest involved.
The suspended board of directors have been asked to extend support to the IRP, and the suspended management asked to deposit Rs 5 crore for immediate expenses. This amount will be subject to adjustment by the committee of creditors as accounted for by the IRP, the tribunal said.
The tribunal has directed the suspended directors of the airline to extend all necessary support to the IRP in keeping Go Airlines as a going concern and running its operations and services smoothly.
Further, it asked the IRP to ensure no layoffs take place at Go First. The IRP should ensure that "retrenchment of employees is not resorted to as a matter of course, and in any event, any such decision event would be brought to its attention immediately".
The airline had filed a voluntary insolvency application on May 2 citing severe fund crunch. It attributed its insolvent state to U.S. engine maker Pratt & Whitney's "defective and failing engines".
Go First had prayed before the bench to pass an interim moratorium saying aircraft are the biggest assets of a company and if such an interim moratorium is not passed, those could be seized by the lessors.
Senior Advocate Neeraj Kishan Kaul appearing on behalf of the airline submitted that the petition meets all procedural requirements under the insolvency and Bankruptcy Code, 2016 to grant an interim moratorium.
The lessors however submitted that such a case does not warrant an interim moratorium as such a step would bar them from taking any step against the airline. Senior Advocate Arun Kathpalia appearing on behalf of the lessors had submitted that such a step would stop third parties who are not present before the bench to take any steps against the airline.