MUMBAI- Wadia-owned Indian ULCC, Go First (G8), had a hard time this week as Lessors were allowed to inspect its aircraft engines, failed talks with Delhivery, and more employees resigned from the airline.
Go First filed for insolvency more than two months ago, and despite this, it is willing to restart operations. Furthermore, the Lessors, creditors, engine manufacturers, cases, defaulters, vendors, employees, passengers, and others are severely affected following insolvency.
Go First Update
Go First entered insolvency proceedings citing financial challenges linked to the defective engines from Pratt and Whitney.
On May 10, the National Company Law Tribunal (NCLT) accepted the case, suspended the board, and enacted a moratorium on the airline’s financial responsibilities.
1) Lessors Allowed to Check Engines
On Friday (August 18, 2023), NCLAT granted permission to Engine Lease Finance BV, the engine lessor of Go First Airlines, to conduct an inspection of the four engines used by the grounded airline.
This decision revised the NCLT’s order from July 26, which had allowed Go First to utilize the leased aircraft, but had disapproved the part of the order that prevented the lessor from examining the engines.
The NCLAT directed the NCLT to resolve the matter promptly and instructed the Resolution Professional (RP) to schedule the inspection within 10 days.
During the hearing, Anandh Venkatramani, the lawyer representing the engine lessor, mentioned that although the RP had informed them on June 5 that engine inspection was possible, it had not been permitted until now, reports Mint.
2) Go First and Delhivery Case
The settlement discussions between Delhivery and Go First have reached an impasse, as revealed by the counsels representing both parties to the National Company Law Tribunal on Thursday.
During the previous hearing, Go First’s resolution professional had indicated their efforts to resolve the matter with Delhivery. The logistics company had submitted an application asserting that the voluntary insolvency petition filed by Go First in early May was characterized by “malicious and fraudulent” intent.
Delhivery’s legal representation pointed out a ten-week delay in Go First’s resolution professional’s response despite the tribunal’s notice and the two-week window provided for a reply.
The tribunal acknowledged this information and instructed Go First’s resolution professional counsel to submit a reply within two weeks and allocated another week for a rejoinder.
In the case against Go First, Delhivery stated that the airline accepted Rs 57 lakh from the logistics provider for future services on May 2 while concurrently initiating a voluntary insolvency petition under Section 10 of the Insolvency and Bankruptcy Code, 2016.
The Wadia Group owns the airline and owes Delhivery Rs 1.59 crore. Delhivery contends that the acceptance of Rs 57 lakh was conducted in a “malafide manner,” given that the airline was cognizant of its monetary situation since April 28, 2023, reports ET.
3) Employees Resignations
“Despite assurances of retention bonuses and a swift operational restart, employees are grappling with frustration as their salaries for the months of May, June, and July remain unpaid,” revealed a senior executive associated with the airline, speaking to Moneycontrol.
The executive further indicated that the attrition rate had gradually slowed down following the initial wave of departures in May.
“Approximately 20 individuals were resigning each week, which was anticipated. Most employees with over five years of tenure at the airline stood by its side,” the executive noted.
However, as the current month commenced, employee discontent intensified, leading to a surge in resignations.
“Over the past two weeks, approximately 150 staff members, comprising 30 pilots, 50 cabin crew members, and 50 ground handling and engineering personnel, have submitted their resignation letters.”another executive associated with the airline disclosed.
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