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The National Company Law Tribunal (NCLT) has officially declared Go First airline bankrupt and initiated its liquidation process. This decision marks the end of a turbulent period for the budget airline, which had filed for voluntary bankruptcy in May 2023. The primary reason cited for the airline's financial distress was the significant delays in securing engines from Pratt & Whitney, a crucial component for its fleet's operational efficiency. The subsequent inability to maintain a viable operational schedule severely impacted the airline's revenue stream and ultimately led to its insolvency.
The NCLT's decision followed the failure of Go First's lenders to formulate a commercially viable revival plan. Despite entering the corporate insolvency resolution process, no proposed solutions satisfied the mandatory requirements of the Insolvency and Bankruptcy Code (IBC) or met the approval of the Committee of Creditors (CoC). This lack of a successful resolution plan triggered the lenders' application for liquidation, which the NCLT ultimately approved. The court's order detailed the significant liabilities accumulated by Go First, totaling approximately ₹8,575 crore. This staggering debt highlights the scale of the financial crisis that ultimately led to the airline's demise.
The liquidation process will now commence under the supervision of the appointed liquidator, Dinkar T. Venkatasubramanian, in accordance with the Insolvency and Bankruptcy Board of India's guidelines. This process involves the systematic sale of the airline's assets to repay its creditors. The secured financial creditors, including prominent banks such as the Central Bank of India, Bank of Baroda, and IDBI Bank, hold substantial claims against Go First's assets. Unsecured creditors, encompassing a wider range of companies and individuals, also hold claims, further complicating the liquidation process. Employees are also owed approximately ₹75 crore in unpaid wages and benefits, adding another layer of complexity to the proceedings. The liquidation will likely take considerable time to complete given the magnitude of the debts and the involved legal procedures. The case serves as a cautionary tale within the aviation industry regarding the potential consequences of supply chain disruptions and the importance of robust financial planning in the face of unforeseen challenges.
The impact of Go First's liquidation extends beyond the immediate stakeholders involved. The loss of a budget airline affects air travel affordability and accessibility for many passengers. The economic consequences also reach beyond the airline itself, impacting employees, suppliers, and various related businesses. Furthermore, the case highlights broader challenges within India's aviation sector. The complexities of securing timely engine maintenance and the potential for significant financial distress due to supply chain disruptions underscore the need for improved regulatory frameworks and industry-wide solutions to mitigate such risks in the future. The government may also need to consider measures to support affected employees and to ensure the continued stability of the broader aviation industry in India.
The Go First liquidation underscores the significant risks inherent in the airline industry, particularly given its reliance on intricate supply chains and external factors beyond an individual company's direct control. The case is a complex legal matter with far-reaching consequences, highlighting the complexities of insolvency proceedings within the Indian legal system. The outcome will have significant implications not only for Go First's creditors but also for the broader landscape of the Indian aviation sector and the nation's economy. Further investigations into the underlying causes of the airline's failure are likely to ensue, potentially leading to policy changes aimed at preventing similar situations in the future. The Go First case serves as a valuable case study for the analysis of financial distress in large organizations and the effectiveness of current bankruptcy laws in resolving such cases.
Source: NCLT ends Go First's turbulent ride, steers co into liquidation