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          Home » New Forensic Audit of Go First Airline by Banks

          New Forensic Audit of Go First Airline by Banks

          On May 2, the airline, backed by the Wadias, proactively initiated insolvency resolution proceedings by submitting a voluntary filing to the Delhi bench of the National Company Law Tribunal (NCLT).

          Bhavya Velani by Bhavya Velani
          June 21, 2023
          in Airline News, Go First, Indian Aviation News, News
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          MUMBAI- In a bid to assess the potential diversion of funds, banks are set to conduct a forensic audit of the cash-strapped Go First Airline (G8), which recently filed for bankruptcy protection.

          The airline, backed by the Wadias, voluntarily filed for insolvency resolution proceedings before the Delhi bench of the National Company Law Tribunal (NCLT) on May 2. Subsequently, on May 10, the tribunal admitted the filing.

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          New Forensic Audit of Go First Airline by Banks
          Photo: By VishuN – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=103141869

          Go First Audit by Banks

          Approval for the appointment of Shailendra Ajmera from EY as the resolution professional (RP) for the debt-ridden airline is granted by the NCLT on June 15, as requested by the Committee of Creditors (CoC).

          Previously, the NCLT appointed Abhilash Lal, backed by Alvarez and Marsal, as the interim resolution professional (IRP) based on the airline’s recommendation.

          As of April 28, 2023, Go First Airlines’ outstanding debt to various lenders, including Bank of Baroda, Central Bank of India, IDBI Bank, and Deutsche Bank, amounted to Rs 6,521 crore.

          Banks have faced significant losses in the past due to the collapse of Kingfisher Air and Jet Airways. Both are burdened with substantial debt.

          A source stated, “Now that the resolution professional has been appointed, he will conduct a transaction audit. Once the transaction audit is completed, lenders could go for a forensic audit of the airline’s book. Further Lenders are likely to take a call on this in a week’s time.”

          Go First Ready to Resume Operations with 26 aircraft
          Photo: Tobias Gudat

          Purpose and Classification of Audits

          The commissioning of transaction and forensic audits is crucial to examine the utilization of loans provided to firms or individuals. These audits play a vital role in helping lenders identify any fraud. Further, the misreporting or diversion of funds by borrowers.

          The airline is expected to be classified as a non-performing asset (NPA) by lenders in the upcoming quarter of this fiscal year, according to a source familiar with the matter.

          The newly-appointed resolution professional is anticipated to present a fresh revival plan for Go First Airlines to the Directorate General of Civil Aviation (DGCA) and the CoC.

          This plan will also include an assessment of the airline’s funding requirements. Based on the viability of the revival plan, the CoC will make decisions regarding interim funding.

          Previously, Lal submitted a revival plan to the DGCA, proposing the resumption of operations with 26 planes and 152 daily flights. As part of this plan, the airline has sought funding of Rs 400 crore from its lenders.

          As of March 31, 2023, the Central Bank of India, consortium leader among the lenders, revealed an outstanding exposure of Rs 1,987 crore to Go First Airlines. Including Rs 682 crore sanctioned under the government’s emergency line of credit guaranteed scheme (ECLGS).

          Bank of Baroda’s exposure to the airline amounts to nearly Rs 1,300 crore, while IDBI Bank’s outstanding loan stands at approximately Rs 50 crore.

          Go First Airlines intends to utilize its undrawn credit limit under the ECLGS as part of the interim funding. However, sources indicate that banks are unlikely to release any funds under the scheme. Due to uncertainties regarding the National Credit Guarantee Trustee Company (NCGTC) credit guarantees.

          New Forensic Audit of Go First Airline by Banks
          Photo: Tobias Gudat

          Crucial Days Ahead for Revival

          Experts in the aviation industry stress the significance of the next ten days for the revival of grounded Go First. It halted its operations on May 3.

          Recently, the airline extended the cancellation of flights until June 19, citing operational reasons. An aviation sector analyst remarked, “It would be difficult to revive the airline unless a concrete revival plan comes up in the next seven or ten days.”

          During the first meeting of the CoC following the airline’s admission to the bankruptcy court on June 9. A proposal is put forth to replace Lal with Ajmera as the RP. On June 15, the NCLT granted approval for Ajmera’s appointment, as requested by the CoC.

          With banks gearing up for a forensic audit. The resolution professional preparing a fresh revival plan. The fate of Go First Airlines remains uncertain. The airline’s stakeholders, lenders, and industry experts eagerly await the outcomes that will determine its future.

          Stay tuned with us. Further, follow us on social media for the latest updates.

          Also Read: US Airlines, Including American, United, Delta, and Southwest, want you to Dress Properly – Aviation A2Z

          Join us on Telegram Group for the Latest Aviation Updates. Subsequently, follow us on Google News.

          Go First Extends Flight Cancellation till 25 June, Restart Update, and More
          Source: Indian Express
          Tags: Go FirstGo First auditGo First Bank AuditGo First Forensic AuditGo first Latest NewsGo first newsGo First ShutdownGo First updates
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          Bhavya Velani

          Bhavya Velani

          Bhavya Velani is the Founder of Aviation A2Z. Bhavya Started Aviation A2Z as a youtube channel and created unique and engaging content for Aviation Professionals. He is very passionate about Writing Aviation Blogs and creating content. Founded in 2018, Aviation A2Z has grown rapidly, with 1 Million Monthly visitors. Bhavya writes for Airways Magazine, AIRLIVE, AeroXplorer, Travel Radar and other global publications.

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