The National Company Law Tribunal (NCLT) on Wednesday awarded bankruptcy protection to Go Airlines, one of India’s biggest airlines, which has since changed its name to Go First. The low-cost carrier declared bankruptcy after claiming losses brought on by “faulty” Pratt & Whitney engines that forced the grounding of roughly half of its 54 Airbus A320neo aircraft. The US engine manufacturer, on the other hand, said that the allegations lacked support.
In particular, an Indian airline has requested bankruptcy protection to restructure its contracts and debt for the first time. The decision may save the airline, but it will be a major issue for its overseas partners who have leased planes to Go First Airlines.
Go First’s Bankruptcy Protection Creates Concerns for Overseas Partners
Today’s business news: All collection efforts and legal actions pertaining to debt and financial concerns come to a temporary halt when a business files for bankruptcy protection following the approval of its bankruptcy. The stay prevents any legal or administrative procedures taken against the debtor, in this case, Go First Airlines, from being enforced or appealed. This indicates that up until the bankruptcy is over, all of the debtor’s assets and properties stay in their current condition. There is a risk that the airline may use the bankruptcy rules to preserve some of its assets in order to stay in business.
Go First will be helped to recover from the crisis by the airline’s temporary management. The CEO of Go First, Kaushik Khona, referred to the NCLT’s judgement as historic because of how quickly it was made. The choice will support the airline’s ability to remain profitable. The airline is also anticipated to continue operating its current 27 aircraft.
Additionally, the NCLT has given the go-ahead for the start of the Corporate Insolvency Resolution Process (CIRP) and the appointment of the insolvency resolution process (IRP). Go First is also required, according to the breaking news, to deposit Rs. 5 crores with IRP to cover its expenditures. The future of Go First’s thousand employees, whose jobs were in doubt, was also in danger due to the bankruptcy. No employees of the firm will be let off, according to a new ruling by an Indian tribunal.