NCLT Orders Liquidation of Go First Airways, Creditors to Recover Assets
The National Company Law Tribunal (NCLT) has ordered the liquidation of budget airline Go First Airways, following an application filed by the Committee of Creditors (CoC).
A bench comprising Judicial Member Mahendra Khandelwal and Technical Member Dr. Sanjeev Ranjan granted the CoC’s request, stating:
“Liquidation is ordered.”
A detailed copy of the order is awaited.
Background of Go First Insolvency Proceedings
On May 2, 2023, Go First filed for voluntary insolvency under Section 10 of the Insolvency and Bankruptcy Code (IBC), seeking admission to the Corporate Insolvency Resolution Process (CIRP). The NCLT admitted the plea on May 10, 2023, appointing a Resolution Professional (RP) to oversee the company’s operations.
However, Go First’s lessors contested the moratorium imposed under insolvency proceedings, arguing that their aircraft leases had been terminated before the CIRP began.
Legal Challenges by Lessors
- Appeal to NCLAT: On May 22, 2023, the National Company Law Appellate Tribunal (NCLAT) upheld the NCLT order but advised lessors to seek further clarification on the moratorium.
- Delhi High Court Intervention: Lessors moved the Delhi High Court, urging the Directorate General of Civil Aviation (DGCA) to deregister their aircraft.
- Government Clarification: On October 4, 2023, the Ministry of Corporate Affairs stated that IBC’s moratorium does not apply to aircraft, engines, or helicopters.
- Deregistration: In April 2024, the Delhi High Court ordered the DGCA to deregister Go First’s fleet, allowing lessors to take control of their aircraft.
Path to Liquidation
With no aircraft and no viable revival plan, the CoC resolved in September 2024 to proceed with liquidation. An application was filed, and after deliberations, the NCLT approved the request.
Initially, concerns were raised regarding the suitability of Resolution Professional Shailendra Ajmera to act as the liquidator. Eventually, the CoC appointed Dinkar Venkatasubramanian to oversee the liquidation process.
Legal Representation
- For the Resolution Professional: Advocates Diwakar Maheshwari, Kumar Saurabh Singh, and Vishnu Sriram (Khaitan & Co).
- For the CoC: Advocate Soumitra Majumdar (JSA Advocates).
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