Go First lenders meeting to discuss liquidation, extension of deadline to invite EoIs

Go First

Lenders to troubled domestic carrier Go First, founded by billionaire Nusli Wadia, will meet on January 5 to discuss the future of the bankrupt airline.

Lenders are looking to discuss a proposal to liquidate Go First, a proposal to choose a firm to evaluate its remaining assets, and another proposal to evaluate potential buyers interested in the airline’s assets, multiple executives aware of the ongoing discussions said.

The committee of creditors to Go First is also said to be considering a proposal to extend the deadline to submit expressions of interest (EOIs) for the airline after three new suitors emerged, CNBC-TV18 reported on January 4. Moneycontrol could not verify this independently.

The committee of creditors of GoFirst is currently voting on a proposal to extend the EOI deadline to allow these suitors, including the domestic carrier SpiceJet, to send their resolution proposals, the CNBC report said, quoting a person familiar with the matter.

Last month, SpiceJet along with two other companies, Sharjah-based aviation company Sky One, and Africa-focused Safrik Investments, had expressed interest in acquiring bankrupt carrier Go First, after the November 22 deadline for submitting an expression of interest passed.

Last week, the Nusli Wadia-led Wadia Group asserted that the bankruptcy of its budget airline Go First in May last year will not hinder its capacity to raise funds for other businesses within the group in the future.

A spokesperson for the group responded to a query from Moneycontrol, saying, "The credit ratings of all Wadia Group companies are robust."

“All companies belonging to the Wadia Group are well funded for all future growth plans,” the spokesperson said, without providing additional details.

Go First Debt

GoFirst, established in 2005, filed for voluntary bankruptcy in May last year. The airline has outstanding debts amounting to more than Rs 6,521 crore, primarily owed to lenders, with a significant portion due to public sector banks.

Following Go First's bankruptcy filing, reports suggested that the Wadia Group might submit a bid for the airline, potentially with the involvement of a global fund. However, in the end, the group did not proceed with such a bid.

Earlier this week, Go First floated a company with its former employees to liaise with the leasing companies.

Earlier this week, Go First floated a company with its former employees to liaise with the leasing companies.

GoFirst’s lenders include Bank of Baroda, Central Bank of India, Deutsche Bank and IDBI Bank, according to the information provided by the airline. Central Bank of India had the highest exposure of Rs 1,987 crore, followed by Bank of Baroda at Rs 1,430 crore, Deutsche Bank at Rs 1,320 crore and IDBI Bank at Rs 58 crore.

Apart from money owed to banks, the airline owes around Rs 2,000 crore to various aircraft lessors, around Rs 1,000 crore to its vendors, around Rs 600 crore to travel agents, and Rs 500 crore to customers with pending refunds.

Go First has also borrowed Rs 1,292 crore under the Centre’s emergency credit scheme, introduced during the covid crisis. The ultra-low-cost airline’s total liabilities amount to around Rs 11,000 crore, including its obligations to lessors.

Go First Assets

Go First’s key remaining asset is a 94-acre parcel of land in Thane that the Wadia Group had given as collateral to banks. The land is valued at approximately Rs 3,000 crore. Apart from the land, the airline’s assets also include an Airbus training facility in Mumbai and its headquarters.

Officials working with the airline who were aware of the ongoing discussions between Go First Resolution Professional Shailendra Ajmera and the Committee of Creditors (CoC) said that the CoC values the assets of Go First at around Rs 3,000 crore.

The Wadia Group airline stopped flying on May 2, 2023, and the National Company Law Tribunal (NCLT) had admitted its plea for voluntary insolvency eight days later.

Go First had around 7,000 employees at the time it declared voluntary bankruptcy on May 2. The Wadia Group-owned airline halted operations and applied for insolvency resolution citing a financial crunch due to the absence of engines and spares, which had grounded half of its fleet.

GoAir had 56 leased aircraft when it suspended operations. Lessors of both engines and aircraft are fighting to get them back.