The beleaguered GoFirst airline owner Wadia Group plans to go for a one-time settlement with banks wherein creditors will take a “substantial haircut”, the media report mentioned.
As the firm doesn’t default, it can offer a resolution plan. The May 4 report showed legal experts on the insolvency proceedings day at the National Company Law Tribunal (NCLT).
Instead of Sections 7 and 9, GoFirst’s Insolvency and Bankruptcy (IBC) petition was filed under Section 10, which permits a debtor to conduct insolvency proceedings against itself. Sections 7 and 9 permit creditors to take the debtor to NCLT for dues recovery.
GoFirst CEO Kaushik Khona said the insolvency was for resolution as Wadia Group would not exit the airline and that Section 10 was better for IBC relief.
The civil aviation ministry told FE that the government wouldn’t interfere in the NCLT matters but was “keeping a close watch” on developments.
Its creditors included the Bank of Baroda, Central Bank of India, Deutsche Bank, and IDBI Bank, owning Rs 6,521 crore and vendor dues amounting to Rs 11,463 crore.
On May 2, Go First suspended all flights for three days beginning May 3 amid a lack of engine supplies from Pratt & Whitney and a severe cash crunch. On May 4, it extended the suspension for 10 days starting May 6.
Go First has promised to refund the entire amount to their respective customers. It operates about 180-185 flights, carrying around 30,000 passengers daily.