Go First Airlines Enters Liquidation After Failing to Secure Revival Plan
Go Airlines (India) Ltd, known as Go First, has been admitted into liquidation by the National Company Law Tribunal (NCLT) in Delhi. This marks the end of the airline’s turbulent journey, with financial struggles and an unsuccessful attempt to revive its operations.
The bankruptcy court’s decision comes after the airline’s lenders, through a resolution professional (RP), failed to receive any viable proposals to resuscitate the company. The NCLT bench, led by judicial member Mahendra Khandelwal and technical member Sanjeev Ranjan, approved the application to initiate the liquidation process. The airline has admitted liabilities of approximately Rs 8,575 crore, a staggering figure that reflects the company’s severe financial distress. The decision to liquidate followed months of financial instability for Go First, which began when the airline’s promoter, the Wadia Group, filed for voluntary bankruptcy in May 2023. The Wadia Group’s decision was triggered by persistent delays in the delivery of engines from supplier Pratt & Whitney, a situation that grounded a significant portion of the airline’s fleet. The company was subsequently placed under the corporate insolvency resolution process (CIRP), under the Insolvency and Bankruptcy Code (IBC). The NCLT ruling stated that the resolution plans presented by interested parties were neither compliant with the requirements of the IBC nor commercially viable. As a result, the Committee of Creditors (CoC) unanimously opted for liquidation instead of continuing the search for a revival plan. According to the 15-page order, the CoC’s conclusion was based on the unfeasibility of restarting the airline’s commercial operations.
The court appointed Dinkar T. Venkatasubramanian as the liquidator of Go Airlines, in line with the guidelines issued by the Insolvency and Bankruptcy Board of India (IBBI) in July 2023. Venkatasubramanian will now oversee the liquidation process, which involves selling off the company’s assets to settle outstanding debts. Go First’s financial creditors include several prominent banks and financial institutions, such as the Central Bank of India, which is owed Rs 1,934 crore, Bank of Baroda with Rs 1,744 crore, and IDBI Bank, which is owed Rs 774 crore. The airline also owes significant amounts to its unsecured creditors, including Rs 90.88 crore to Bombay Burmah Trading Corporation and Rs 1,330 crore to Leila Lands Ltd. In addition, the airline has an outstanding Rs 75 crore in dues to its employees.
This liquidation is a stark reminder of the difficulties faced by the airline industry, particularly low-cost carriers, during times of financial and operational strain. Go First’s failure to secure a viable revival plan highlights the harsh realities of the aviation sector, where the high costs of operations, including aircraft maintenance and fuel, often make recovery challenging without strong financial backing. In the aftermath of the liquidation order, Ashish Pyasi, a partner at law firm Aendri Legal, explained that the assets of Go First will now be liquidated to pay off the creditors. This process is expected to take time and could leave many stakeholders, including employees and suppliers, with significant losses. For the aviation industry, Go First’s downfall serves as a cautionary tale of the fragility of low-cost carriers operating in a competitive and high-cost environment. The liquidation process marks a poignant chapter in the ongoing struggles of the airline, which was once a significant player in India’s aviation market. Go First’s journey, from its initial financial troubles to the eventual liquidation, underscores the challenges within the aviation industry and the crucial need for effective financial management and operational efficiency to survive in an increasingly competitive landscape.
