Go First Bankruptcy: Lenders Of Troubled Airline To Meet This Week To Weigh Liquidation

Lenders to India's Go First are convening this week to deliberate on the fate of the beleaguered airline, contemplating options that include liquidation in the wake of a recent court ruling allowing lessors to repossess aircraft, two bankers familiar with the matter disclosed on Tuesday.

The airline, grappling with a court order enabling lessors to reclaim planes, has seen its value plummet, with little prospect for recovery, remarked one of the bankers, speaking on condition of anonymity due to the sensitivity of the issue.

"We have acknowledged the judgement issued by the Delhi High Court on April 26, 2024. We will review the details of the order once we receive the official document. Following this review, we will evaluate our position and consider any necessary adjustments to our proposed offer for Go Air. Our commitment remains to proceed in a manner that respects the legal process and aligns with our strategic objectives," Nishant Pitti, CEO of EasyTrip, said on social media X.

Creditor Details and Debt

Go First finds itself saddled with debts totaling 65.21 billion rupees ($780.88 million), owed to creditors such as the Central Bank of India, the Bank of Baroda, IDBI Bank, and Deutsche Bank.

The Committee of Creditors (CoC) convened on Monday, with another meeting slated for Thursday, according to both sources, who declined to be identified as they are not authorised to speak publicly on the matter.

Bids Received During Bankruptcy Process

Reports indicate that Go First has received two bids through the formal bankruptcy process. One bid hails from a consortium, led by Ajay Singh, the managing director of budget carrier SpiceJet, in collaboration with Busy Bee Airways. The second bid originates from Sky One, headquartered in Sharjah.

Jaideep Mirchandani, Chairman of Sky One, expressed confidence in the company's ability to leverage its assets and resources to rejuvenate Go First, should its bid prove successful.

"Our extensive experience as lessors and our comprehensive portfolio of aviation services uniquely position us to address the challenges and opportunities presented by Go First's situation," Mirchandani stated in an email response to Reuters.

However, there has been no response to emails seeking comment from Ajay Singh and Nishant Pitti, the majority shareholders of Busy Bee, as reported by Reuters.

According to the second banker, lenders have the discretion to reject the current bids, citing dissatisfaction with the offered amounts from both applicants.

The banker highlighted that the bids factor in the value of a piece of land offered as collateral by the airline's promoters.

While liquidation appears to be the most viable option given the prevailing circumstances, both bankers emphasised that a vote on this matter will be conducted once the committee officially rejects the two offers or if the applicants withdraw their bids.

Go First Review

With Go First's future hanging in the balance, stakeholders are closely monitoring developments as lenders weigh the best course of action amidst mounting debts and legal challenges. The airline's fate hinges on the decisions made in the coming days, with liquidation looming as a distinct possibility unless a viable solution emerges to salvage the company from the brink of collapse.

As the aviation industry grapples with the fallout from the pandemic and its ripple effects, the saga of Go First serves as a stark reminder of the sector's vulnerability to external shocks and the importance of swift and decisive action in navigating turbulent times.