On May 2, Go First filed for the voluntary insolvency resolution proceedings. Recently, National Company Law Tribunal (NCLT) accepted Go First’s plea to initiate insolvency resolution proceedings and appointed Abhliash Lal as interim resolution professional (IRP) to run the debt-ridden firm. The tribunal in its order put the company under the protection of a moratorium and directed the suspended board of directors to assist the IRP in running the company during the insolvency proceedings. Additionally, the NCLT ordered that the company be kept as a going concern, and no employees are retrenched.
Following the decision, Go First CEO, Kaushik Khona, referred to the NCLT’s ruling as a landmark judgement. He claimed that the decision is a “perfect example” in the context of reviving a viable business before it becomes unviable and a timely and effective judgement. The cash-strapped airline has liabilities worth INR 11,463 crore and has sought voluntary insolvency resolution proceedings, as well as an interim moratorium on its financial obligations. More than half of the airline’s fleet is grounded due to the non-supply of engines by Pratt & Whitney.
NCLT Order to Initiate Insolvency Resolution Proceedings ‘Landmark, Historic’: Go First CEO
The National Company Law Tribunal (NCLT) has recently admitted Go First’s plea to initiate insolvency resolution proceedings. In response, Go First CEO Kaushik Khona has called this decision a “landmark judgment” that is both timely and effective for the company’s revival.
Here are some key points to know about the NCLT order and its implications for Go First:
The Context of the NCLT Order
Go First, formerly known as GoAir, is a cash-strapped airline that stopped flights on May 3, 2023, due to a financial crunch caused by the grounding of more than half of its fleet. The company filed for voluntary insolvency resolution proceedings on May 2, seeking an interim moratorium on its financial obligations and protection under the Insolvency and Bankruptcy Code (IBC).
The NCLT Order
On Wednesday, May 10, the NCLT admitted Go First’s plea to initiate insolvency resolution proceedings and appointed Abhliash Lal as interim resolution professional (IRP) to run the debt-ridden firm. The NCLT also put the company under the protection of moratorium and directed the suspended board of directors to assist the IRP in running the company during insolvency proceedings. The NCLT order ensures that no employees are retrenched and that the company remains a going concern.
Following the NCLT order, CEO Kaushik Khona praised the decision, calling it a “historic and landmark judgment” that serves as a perfect example “in the context of revival of a viable business before it becomes unviable.” Khona also expressed his belief that the order is very timely and effective for the revival of the company.
Impact of the NCLT Order
The NCLT order is expected to provide much-needed relief to Go First and pave the way for its revival. The appointment of an IRP will enable the company to restructure its debt and get back on its feet. The order also provides protection to the company from its creditors and ensures that it can continue to operate without any interruption.
In conclusion, the NCLT order to initiate insolvency resolution proceedings is a landmark decision that will have a significant impact on Go First’s future. The appointment of an IRP and the protection under the IBC will enable the company to overcome its financial difficulties and emerge as a stronger player in the Indian aviation industry.
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