MUMBAI- According to sources familiar with the matter, the Wadia Group intends to secure funds promptly to restart its insolvent airline, Go First (G8). Further, the group has approached lenders, expressing its desire to borrow up to Rs. 225 crores.
One of the lenders stated that the airline is searching for funding within the prescribed limits to support its business operations. Subsequently, the airline aims to acquire fresh capital amounting to Rs. 225 crores.
Go First Wants Restart funds
Under the Corporate Insolvency Resolution Process (CIRP), an insolvent company has the ability to secure funds through an Interim Resolution Professional, allowing it to sustain its operations.
The current limit for sanctioned funds can be increased in the future, subject to the agreement of the lenders.
The lenders explained that since Go First has initiated bankruptcy proceedings under the CIRP with the National Company Law Tribunal (NCLT), the matter is currently being deliberated among the airline’s creditors.
The lender mentioned earlier stated that the banks are willing to provide funding for the airline. But only within the framework established by the NCLT.
According to earlier reports by Moneycontrol, the banks were not considering lending to GoFirst until the resolution process was completed.
However, the situation has changed as the airline has begun seeking loans to fulfill financial obligations. Such as employee salaries, payments to oil marketing companies, and airport dues. Senior executives closely involved in the matter disclosed this development.
“One of the executives stated that the airline urgently needs fresh funding to resume its domestic operations and expand its scale.”
G8 Owes Lenders
GoFirst initiated its insolvency and bankruptcy petition using Section 10 rather than Sections 7 and 9.
Unlike Sections 7 and 9, which enable creditors to bring the debtor before the National Company Law Tribunal (NCLT) to recover outstanding payments, Section 10 allows the debtor itself to initiate insolvency proceedings.
According to the filing made by Go First, the airline has outstanding debts of Rs. 6,521 crore to various lenders, including Bank of Baroda, Central Bank of India, Deutsche Bank, and IDBI Bank.
As per a report from Acuite Ratings and Research dated January 19, Central Bank of India has the largest exposure with Rs. 1,987 crore, followed by Bank of Baroda with Rs. 1,430 crore, Deutsche Bank with Rs. 1,320 crore, and IDBI Bank with Rs. 58 crore.
Go First Appeal DGCA to Not Revoke AOP
According to reliable Hindu business line sources within the DGCA, Go First has responded to the show-cause notice issued by the regulatory body.
In its response, the airline clarified that its decision to file for insolvency. It was not a result of its inability to operate but rather aimed at addressing debt-related issues. Further ensuring the uninterrupted operation of its aircraft.
To support its position, Go First cited examples of global airlines like American and Pinnacle Airlines that successfully resumed operations after filing for insolvency.
The source stated, “The airline has expressed its intention to resume operations as soon as possible. They have expressed confidence in their ability to do so.”
Additionally, Go First stressed to the DGCA the significance of not cancelling the airline’s Air Operator’s Permit (AOP). Doing so would undermine the National Company Law Tribunal’s (NCLT) purpose. Furthermore, it could potentially result in the airline’s downfall.
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