Go First insolvency resolution gets 90-day extension from NCLT

The Resolution Professional (RP) has verified that, despite receiving an expression of interest from Jindal, no resolution plan has been received. This extended period concludes on February 4.

The National Company Law Tribunal (NCLT), on November 23, extended the Corporate Insolvency Resolution Process (CIRP) of the grounded airline Go First by 90 days.

The 90-day extension commences on November 6 this year and ends on February 4, 2024.  The NCLT directed that the resolution plan be completed within the stipulated period of time. Furthermore, the tribunal dismissed the objections by the airline's lessor for the extension.

Go First's Resolution Professional (RP) told the tribunal that there is one prospective bidder for the airline, however, they did not submit the resolution plan till the November 21 deadline. He further argued that the Committee of Creditors (CoC) is now reconsidering the next course of action for the airline.

The RP told the NCLT that the CoC has passed a resolution for seeking this extension by a 100 percent vote.

According to the Insolvency and Bankruptcy Code (IBC), 2016, a resolution process must be completed by 180 days and the NCLT has the powers to extend the period for completing the resolution process to a maximum of 330 days. If there is no resolution to a company's insolvency even at the end of 330 days, the NCLT has to order liquidation of the company. On February 4, the airline would have been under the resolution process for 270 days.

On November 21, Reuters reported that Jindal Power Ltd, the only company whose expression of interest (EoI) to take over Go First was accepted by creditors, has decided to not follow through with a bid, three people familiar with the plans said, pushing the insolvent airline closer to liquidation.

Go First insolvency at NCLT

On May 2, 2023, Go First filed a plea in the NCLT under Section 10, asking to be admitted to the Corporate Insolvency Resolution Process (CIRP) voluntarily. On May 10, the NCLT admitted Go First’s insolvency plea, and appointed a Resolution Professional (RP) to run the affairs of the company.

However, Go First’s aircraft lessors filed an appeal against the NCLT order in the National Company Law Appellate Tribunal (NCLAT) stating that their assets had unfairly been taken from them as they had terminated the leases before the moratorium.

The corporate affairs ministry, meanwhile, issued a notification exempting aviation leases from the moratorium. This, coupled with a change in the bench, led to the case being deferred.

However, in what could be considered a blow to the Go First revival plan, the Director General of Civil Aviation (DGCA) filed an affidavit in the Delhi High Court clarifying that the notification exempting aviation leases from moratorium under the Insolvency and Bankruptcy Code 2016 should apply to pending cases as well.