Go First gets 60-day extension to complete insolvency process, deadline extended from April 4 to June 3
Upstox
2 min read • Updated: April 8, 2024, 6:42 PM
Summary
The NCLT is awaiting a resolution for the two offers for acquisition from potential bidders and granted a 60-day extension to conclude the process. Market experts think another extension is unlikely, with the airline holding bids from the SpiceJet consortium and Sky One Aviation.
Bankrupt airline GoFirst gets another extension from the National Company Law Tribunal (NCLT) for another 60 days to complete its insolvency process. The deadline has been extended from April 4 to June 3.
According to the Insolvency and Bankruptcy Code (IBC), the corporate insolvency resolution process (CIRP) has to be concluded within 330 days including all extensions and legal proceedings. Once this timeline has lapsed, liquidation proceedings must be initiated. The NCLT can push the process beyond the standard 330-day limit, if deemed necessary.
The extension was based on a ruling from the Essar Steel case, under which the Court granted an extension beyond the mandatory 330-day deadline based on exceptional circumstances.
The petitioners cited the judgement as precedent and said resolution plans were underway and nearing conclusion. The NCLT granted an extension despite significant disapproval from lessors. The committee of creditors (CoC), including Central Bank of India, Bank of Baroda, and IDBI Bank Ltd, unanimously supported the extension request at a meeting on March 29.
The NCLT granted the extension after it was informed of two resolution plans. The struggling airline has received two offers for acquisition from potential bidders—one from Sharjah-based Sky One Aviation and another joint bid by SpiceJet's Ajay Singh and Busy Bee.
SpiceJet shares were 0.89% down on Monday. They closed at ₹64.40 on the BSE. According to a Reuters report dated February 24, the consortium led by SpiceJet promoter Ajay Singh and Busy Bee Airways raised its bid for Go First from ₹1,600 crore to around ₹1,800 crore.
Go First filed for voluntary insolvency on May 2, 2023, under Section 10 of the IBC, and the NCLT admitted its insolvency plea on May 10, 2023. The airline grounded all flights from May 3, citing concerns regarding engines sourced from Pratt & Whitney.