Beleaguered Wadia Group airline Go First has proposed the name of insolvency professional Abhilash Lal as the interim resolution professional (IRP) in its voluntary bankruptcy plea filed at the NCLT, Delhi, multiple industry sources with knowledge of the matter told Moneycontrol.
"The cash-strapped carrier has also roped in leading professional services and turnaround firm Alvarez & Marsal as an advisor for the ongoing proceedings," one of the persons cited above said.
"The company has picked Lal as their choice for the role of IRP, but this will have to get the nod from the NCLT and also later from the committee of creditors. A hearing in the matter is scheduled tomorrow," a second person elaborated.
A third person confirmed the above.
All three persons above spoke to Moneycontrol on the condition of anonymity.
Earlier, in a separate case, the NCLT Hyderabad had appointed Abhilash Lal as the interim resolution professional for the insolvency proceedings of Seven Hills Healthcare following a case filed by Axis Bank.
Moneycontrol has sent email queries but could not elicit immediate responses from Go First & Alvarez & Marsal and will update this article as soon we hear from both parties. Abhilash Lal was unavailable for comment.
Incidentally, back in 2015, Jet Airways had appointed Alvarez & Marsal to revive the operations of the firm post the sale of a 24 per cent stake to Etihad Airways. However, the airline hasn't taken to the skies yet amid unresolved issues between lenders and the Jalan-Kalrock consortium for the transfer of the firm.
"In a voluntary insolvency application - the NCLT checks for two elements: (i) there is a default in payment of the debt by the corporate debtor, and (ii) the shareholders of the corporate debtor have passed a special resolution for filing of the voluntary insolvency application before the NCLT," said Shahezad Kazi, Partner (Disputes), S&R Associates on the factors considered by the tribunal before admitting such pleas.
Also read | Why analysts are not surprised at Go First’s bankruptcy filing
Why did Go Air opt for NCLT route?
The voluntary insolvency filing announcement was made by the airline’s CEO Kaushik Khona shortly after the Wadia Group-owned carrier said it will temporarily suspend flight operations on May 3 and 4 due to a "severe fund crunch". The flights will be restarted once the NCLT admits the application, Khona said.
The loss-making airline said in a statement: “Go First has had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines, LLC, which has resulted in Go First having to ground 25 aircraft (equivalent to approximately 50 percent of its Airbus A320neo aircraft fleet) as of 1 May 2023. The percentage of grounded aircraft due to Pratt & Whitney’s faulty engines has grown from 7 percent in December 2019 to 31 percent in December 2020 to 50 percent in December 2022. This is despite Pratt & Whitney making several ongoing assurances over the years, which it has repeatedly failed to meet.”
“It is an unfortunate decision (filing for voluntary insolvency resolution proceedings) but it had to be done to protect the interests of the company,” Khona said.
Go First: What are the dues and who are the lenders?
According to reports, Go First, which filed for bankruptcy on Tuesday, owes financial creditors Rs 6,521 crore ($798 million), its bankruptcy filing showed. As of April 30, Go First Air had not defaulted on any of these dues, it said in the filing, which was seen by Reuters.
The filing lists Central Bank of India Ltd, Bank of Baroda Ltd, IDBI Bank Ltd, Axis Bank Ltd and Deutsche Bank among Go First's financial creditors, reports added.
Also read | IOCL invokes Rs 500 cr bank guarantee by Go First, dues at Rs 50 crore now: Sources
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