MUMBAI- According to banking sources, Go First (G8), a financially strained budget airline, has requested an additional Rs 400-600 crore in funding from its lenders to resume its flight operations from July 1.
The lenders will assess the proposal within the next 48 hours, as disclosed by the sources on Wednesday evening. Further, the bankers, who preferred to remain anonymous due to lack of authorization, revealed the development.
Go First to Resume Flight Operations
As per one banker, Go First, currently under bankruptcy protection, intends to resume operations in July, operating 78 daily flights with a fleet of 22 aircraft. However, the airline will require approval from India’s aviation regulatory body.
Another banker mentioned that the resumption of operations is contingent upon various factors, including regulatory clearances.
The bankruptcy filing of Go First includes a list of creditors, including the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank, who are collectively owed Rs 6,521 crore.
Go First Audit by Banks
n 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.
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.”
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.
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