The National Company Law Tribunal (NCLT) on July 3 1sued notice to grounded airline Go First’s committee of creditors (CoC) and Insolvency and Bankruptcy Board (IBBI) seeking their response. It also asked the resolution professional to get a resolution from the CoC on refunds.
The matter is now listed for hearing on August 7.
During the hearing, Go First said it has to refund Rs 597 crore to 15.5 lakh passengers since its grounding on May 3. Appearing for the airline's resolution professional, senior advocate Ramji Srinivasan argued that the company receives about 97 percent of its bookings through booking aggregators and the other three percent directly from its website. He argued that aggregators maintain an escrow account with the airline where the aggregators deposit some money against which they make bookings for customers.
According to the RP, as on the date of cancellation, the escrow account was Rs. 820 crore with Rs. 380 crore for current booking and Rs. 440 crore for future booking. With the cancellations since May 3, the airline has shifted payments to the aggregators, as a result of which the current balance is Rs. 550 crore. Srinivasan told the court that if the amount is not made available to the aggregators, the airline's resumption plans will be affected. Thus he sought for the tribunal's orders on the same.
The tribunal however noted that since any order passed to this effect will have a direct bearing on the CoC, the RP must get a resolution from them on refunds before the next date of hearing.
Thus the matter has now been adjourned to August 7.
The move is being seen as another step towards the resumption of operations after the NCLT refused to stop the debt-laden airline from using leased aircraft. The airline has a 56-aircraft fleet.
The NCLT in an advisory on July 3 asked the ticket holders to make their claims with the resolution professional for refunds of cancelled tickets.
The Wadia group-owned airline’s refund move comes after the Directorate General of Civil Aviation (DGCA) on July 21 accepted its plan to resume service but with conditions attached. The airline will have to prove it has the required funds and the regulator’s nod for the flight schedule.
On July 26, NCLT turned down a plea by seven of the lessors to restrain the airline from using the leased aircraft, a decision seen as a boost for the low-fare carrier.
The tribunal held that aircraft and engines were essential to keep the company running as a “going concern”.
Go First filed for bankruptcy protection in May, blaming engine maker Pratt & Whitney for the grounding of half of its fleet and economic woes, a claim denied by the company.
The airline owes Rs 8000 crore to a consortium of banks, which includes State Bank of India, Punjab National Bank , IDBI, Canara Bank and ICICI Bank.
On May 10, NCLT accepted its plea to initiate the insolvency resolution process. The tribunal appointed an insolvency resolution professional, suspended the board and imposed a moratorium on the airline's financial obligations.
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