Another Indian Carrier Bites the Dust, Indian National Company Law Tribunal orders liquidation of Go First.

• The Indian National Company Law Tribunal (NCLT) has issued an order for the liquidation of the grounded ultra low-cost Indian carrier Go First, marking the final chapter in the airline’s financial turmoil.
• The decision was made by an NCLT bench comprising Judicial Member Mahendra Khandelwal and Technical Member Dr. Sanjeev Ranjan, who upheld the Committee of Creditors (CoC) application for liquidation.
• The liquidator should submit a preliminary report to the tribunal within 75 days from the date of commencement of the liquidation.

• The cash-starved airline reported a loss in the range of INR 1,800 crore, including an INR 800 crore notional loss due to accounting standards in the financial year ended March 2023.

The National Company Law Tribunal (NCLT), a government body of India, on Monday ordered the liquidation of Ultra Low-cost carrier "Go First Airways", two years after it shut flight operations and approached the court seeking voluntary insolvency.

The CoC had filed for liquidation in September 2024, citing the airline’s lack of aircraft and an absence of a viable revival plan. The NCLT had reserved its judgment in December 2024, and the ruling now confirms the end of any potential recovery efforts.

The airline's collapse was accelerated by the repossession of its aircraft by lessors. According to legal representatives of Go First’s creditors, by December 31, 2024, more than half of the airline's 54 aircraft had left India, with a significant portion repossessed by leasing firms.

By the end of 2024, 28 aircraft had already been repossessed by their respective lessors. Go First's financial troubles began in May 2023, when the airline filed for bankruptcy.

Despite receiving two financial bids under the insolvency process, lenders ultimately decided to liquidate its assets after rejecting the suitors' proposals for revival.

As per NCLT, the Committee of Creditors (CoC) in the legislative scheme is empowered to take the decision to liquidate the corporate debtor, at any time after its constitution and before confirmation of the resolution plan.

“It is well settled that the decision taken by the CoC for liquidation in commercial wisdom of the CoC should not be interfered with by the Adjudicating Authority. Further, the resolution for liquidation of the corporate debtor was approved by the CoC with 100 per cent voting. Therefore, this Adjudicating Authority sees no merit in interfering with the commercial wisdom of the CoC,” it noted.

As per the Indian Insolvency and Bankruptcy Code, the liquidator for Go First will now initiate the proceeding with issuance of a public announcement for claimants to file revised and updated claims. 

Further to this, they will seize the assets and monetize them to settle the claims and close the company within a span of one year.

The assigned liquidator should submit a preliminary report to the tribunal within 75 days from the date of commencement of the liquidation.

What happened to Go First ?

• Go First (erstwhile GoAir) started domestic operations in the year 2005-06 with the first flight from Mumbai to Ahmedabad, and then in 2018-19, launched international operations.
• Since commencing operations, Go First had placed two orders for 72 A320 neo planes each with Airbus, one in 2011-12 and another in 2016-17.
• On May 13, 2021, when the Pandemic battered the air travel industry, the carrier rebranded itself as ‘Go First’ with a focus on an ultra-low-cost business model.
• On May 2, 2023, Go First filed a voluntary plea under Section 10 of the IBC, seeking admission to the Corporate Insolvency Resolution Process (CIRP).
• The NCLT admitted the application on May 10, appointing a Resolution Professional (RP) to manage the airline's affairs.
• However, the carrier's lessors appealed to the National Company Law Appellate Tribunal (NCLAT), arguing that their assets had been unfairly retained under the moratorium despite the termination of leases before the proceedings began.
• On May 22, 2023, the NCLAT upheld the NCLT's decision and directed the lessors to seek clarification regarding the moratorium from the NCLT.
• The lessors subsequently approached the Delhi High Court, urging the Directorate General of Civil Aviation (DGCA) to deregister their aircraft. Initially, the Indian DGCA resisted, citing the moratorium.
• However, on October 4, 2023, the Ministry of Corporate Affairs clarified that Section 14(1) of the IBC would not apply to transactions involving aircraft, engines, airframes or helicopters.
• The DGCA had to submit an affidavit before the Delhi High Court affirming that the exemption should apply to pending cases but deferred action on Go First’s case, citing its sub judice status.
• On April 26, 2024, the Delhi High Court ordered the DGCA to deregister the airline’s fleet, which was completed by early May 2024. 
• With an evidence of no available aircraft and no viable revival options, the CoC decided in September 2024 to liquidate the company and filed the application for the same.

Go First's Assets and Liabilities

One of the major assests of Go First is a 94-acre Real estate property in Thane, Maharastra, which the promoter Wadia Group had pledged as collateral to the banks. The land is valued at around ₹3,000 crore at this time.

Among other significant assets include an Airbus training facility in Mumbai and the airline's headquarters.

Apart from its bank debts, Go First also owes around ₹2,000 crore to different aircraft lessors.

Go First owes around ₹1,000 crore to its vendors, about ₹600 crore to travel agents, and ₹500 crore to customers waiting for refunds.

The airline had also availed ₹1,292 crore under the government's emergency credit scheme during the COVID-19 crisis.

Including its dues to lessors, the total liabilities of this low-cost airline stand at around ₹11,000 crore.

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