MUMBAI- Wadia-backed Go First (G8) Airlines resolution professional (RP) Shailendra Ajmera has approached the airlines’ financiers, seeking Rs 425 crore in interim finance to kickstart a revival plan that could facilitate the restart of operations, as per multiple sources familiar with the matter.
According to sources, the financing requirement may increase based on certain contingencies. Including the availability of operational engines for the aircraft and ticket cancellations.
Go First Restart Funds
The proposal for funds is presented to Go First’s committee of creditors during a meeting held earlier this week. The committee consists of prominent financial institutions such as the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank.
Approval from the Indian Directorate General of Civil Aviation (DGCA) is necessary for the airline to recommence operations. However, this approval is contingent upon the availability of financing.
Before granting consent for the airline’s restart, creditors must endorse the financing proposal. While some sources claim that the creditors have given in-principle approval for financing. While others are awaiting clarity from the aviation regulator before finalizing an interim finance proposal.
Go First’s Insolvency Filing
Go First filed for insolvency under Section 10 of the Insolvency and Bankruptcy Code (IBC), which allows financially distressed companies to undergo a court-led debt resolution process. The National Company Law Tribunal (NCLT) admitted the insolvency petition on May 10.
The airline’s total dues to banks and financial institutions amount to approximately Rs 6,000 crore. In its application for voluntary insolvency, Go First stated that it had defaulted on payments of Rs 2,600 crore to aircraft lessors and Rs 1,200 crore to vendors.
The company attributed its insolvency filing to the grounding of several aircraft due to defective engines supplied by US-based aerospace manufacturer Pratt and Whitney.
Go First’s resolution professional is actively seeking interim finance to initiate the revival plan and secure necessary approvals from creditors and regulatory authorities.
The airline’s future prospects hinge on successfully addressing financial challenges and overcoming operational hurdles, such as engine availability, to pave the way for a successful restart.
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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