Go First Airways to be liquidated

The National Company Law Tribunal (NCLT) on Monday ordered the liquidation of budget airline Go First Airways. The order comes after a protracted legal fight between the airline and its creditors and lessors.

An NCLT bench comprising Mahendra Khandelwal (judicial member) and Sanjeev Ranjan (technical member) pronounced the order on an application filed by the Committee of Creditors (CoC) of the bankrupt carrier.

Go First had, on 2 May 2023, filed a voluntary application seeking insolvency resolution under section 10 of the Insolvency and Bankruptcy Code (IBC). The NCLT admitted the application on 10 May and appointed a debt resolution professional (RP) to administer the airline.

Go First’s lessors then moved the National Company Law Appellate Tribunal (NCLAT) seeking return of their assets that had been unfairly frozen under the NCLT debt resolution process.

The NCLAT, however, upheld the NCLT decision and directed the lessors to seek remedy from the NCLT.

The lessors then moved the Delhi High Court seeking a direction to the Directorate General of Civil Aviation (DGCA) to deregister their aircraft. 

DGCA initially resisted citing the NCLT debt resolution process, but later filed an affidavit before the high court stating that the exemption should apply to pending cases, but still deferred deregistration of the leased aircraft saying it is sub judice.

The ministry of corporate affairs issued a clarification, on 4 October 2023, that Section 14 (1) of the IBC is not applicable to transactions involving aircraft, engines, airframes or helicopters.

The high court, on 26 April 2024, issued an order directing DGCA to deregister the airline’s fleet, which led to the return of the aircraft to the lessors under Rule 32A of the Aircraft Rules.

By December 2024, lessors had flown out over half of Go First’s fleet of 54 planes. With no worthwhile assets to hang on to and no viable revival options, the CoC filed an application for liquidation of Go Air in September 2024.

NCLT while allowing the petition, sought a replacement of the resolution professional to act as the liquidator and also refused to examine an option for third party funded arbitration at the Singapore International Arbitration Centre (SIAC).