NCLT extends insolvency resolution process for Go First by 60 days

The National Company Law Tribunal warned the airlines that this would be the final extension offered

The National Company Law Tribunal (NCLT) has granted a 60-day extension to the Corporate Insolvency Resolution Process (CIRP) of the grounded airline Go First, emphasising that this would be the final extension, according to a report by MoneyControl on Wednesday. This marks the fourth such extension requested by Go First’s lenders. The CIRP is now set to conclude on August 3, 2024.

This decision follows the revelation that three parties have expressed interest in acquiring the airline.

Go First filed for insolvency under Section 10 of the IBC on May 2, 2023, seeking to be admitted to the CIRP. The NCLT accepted the plea on May 10, 2023, and appointed a resolution professional (RP) to manage the company's affairs.

During the most recent hearing, the RP for Go First argued that the extension was necessary due to extraordinary circumstances following a Delhi High Court judgment. The court had instructed the Directorate General of Civil Aviation (DGCA) to deregister all 54 of Go First's aircraft. The RP noted that potential buyers had revised their offers, and lenders needed more time to evaluate these proposals.

However, the NCLT criticised the RP for repeatedly seeking extensions without substantial progress in the resolution plan.

Insolvency and Bankruptcy Code Regulations

According to the Insolvency and Bankruptcy Code (IBC), 2016, the resolution process must be completed within 180 days. The NCLT can extend this period to a maximum of 330 days. If no resolution is achieved within this timeframe, the NCLT is mandated to order the company's liquidation. The 330-day period for Go First ended in April 2024, but the tribunal has used its discretionary powers to grant additional time in hopes of reviving the airline.

Go First bidders

Go First, formerly known as GoAir, received two acquisition bids on February 26. One bid came from a consortium comprising SpiceJet's chairman and managing director Ajay Singh and Busy Bee Airways, associated with EaseMyTrip’s CEO Nishant Pitti, submitted in their personal capacities. The other bid was from Sky One Airways, owned by Jaideep Mirchandani.

In May, reports surfaced that Nishant Pitti had withdrawn his personal bid from the acquisition process. Ajay Singh made no comment on whether the bid would proceed without Pitti. At Rs 1,500 crore, the two had been the frontrunners in the bidding process.