The recent Delhi High Court ruling permitting lessors to deregister and repossess 54 aircraft from Go First has severely compromised the prospects of creditors recovering substantial value from the defunct airline, informed sources disclosed.
With the fleet now stripped, there remains scant assets for potential sale, threatening to derail the ongoing bankruptcy proceedings without any foreseeable chance of revival, insiders revealed. A crucial meeting of lenders is slated for Monday to chart out the next steps. An anonymous source familiar with the matter remarked, “The recent court decision renders the airline’s sustainability untenable. Even prior to this development, the airline’s asset value was meagre due to prolonged legal proceedings. Now, with the aircraft gone, there’s virtually nothing left to salvage. Lenders must earnestly deliberate whether it’s prudent to persist with the current process or redirect recovery efforts towards more promising avenues.” In response to a plea by lessors, the high court directed the Directorate General of Civil Aviation (DGCA) to execute the deregistration and surrender of all 54 aircraft. Additionally, the resolution professional (RP) was instructed to furnish comprehensive information about the airline to the lessors, while prohibiting Go First from tampering with any aircraft-related documentation or spare parts.
The court’s verdict follows a legal challenge by lessors seeking the lifting of the moratorium on Go First’s assets, which had been imposed by the National Company Law Tribunal subsequent to the airline’s voluntary insolvency filing in May last year. Lenders are now pinning their hopes on arbitration proceedings underway in Singapore and a substantial landholding in Thane for potential recovery from the defunct carrier. Notably, the aircraft were leased rather than owned outright, potentially sparing lenders from escalating maintenance costs that could have eroded recovery prospects. Moreover, ongoing arbitration against Pratt & Whitney seeks redressal for faulty engine supply, while a sizable land asset in Thane could yield significant returns upon future development. In light of these developments, creditors are recalibrating their recovery strategies, acknowledging the diminishing prospects of recuperating substantial losses through the airline’s bankruptcy proceedings.
