The Insolvency and Bankruptcy Board of India (IBBI) on August 7 told the National Company Law Tribunal (NCLT) that they do not wish to take a stand in grounded airline Go First's application seeking permission to refund ticket fare to passengers after it was grounded on May 3.
The NCLT, however, directed them to file this in the form of a reply and adjourned the case to August 25. During the hearing, the Committee of Creditors (CoC) of the airline undertook to file a response to the application shortly.
On July 31, 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.
The NCLT had directed the CoC and IBBI to file a response to the application, the tribunal also Resolution Professional (RP) of the airline to get a resolution from the CoC authorising him to file a response.
Go First's application 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 8,000 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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