Creditors to bankrupt Go First Airlines have unanimously voted to allow fresh proposals from prospective resolution applicants (RAs) to take over the defunct airline, more than a month after receiving no submissions in a process that ended in November.
Five entities have expressed interest in the airline. Three – Sharjah-based aviation company Sky One, Africa-focussed Safrik Investments and budget airline SpiceJet – had submitted expressions of interest (EoIs) last month.
Two more entities – US-based NS Aviation and Plan IT, which is a consortium of individuals – also subsequently expressed interest in submitting proposals, said two people familiar with the process.
“All these applicants will now have to submit a bank guarantee of Rs 5 crore and give a formal EoI to participate in the process,” said one of the persons. “Creditors think there is no harm in seeing what is on offer, given that there is still time in the process.”
Among the new applicants, SpiceJet is considered a serious contender being a domestic carrier.
CIRP can be extended by two more months
NS Aviation, which announced in June last year that it had acquired an 85% stake in Hyderabad-based defunct budget airline TruJet, has also said it will submit a plan.
Plan IT could not be immediately reached.
“Among the new applicants, Plan IT had also tried in the first round but it did not meet the ₹1,000-crore net worth criteria,” said a second person aware of the process. “This time it plans to get a European investor to meet the criteria. It remains to be seen which of these applicants finally submit a bank guarantee and qualify to give a formal proposal.” Resolution professional (RP) Shailendra Ajmera had called for a vote after receiving unsolicited interest from the three entities last month for conducting due diligence of the grounded airline. Ajmera did not reply to an email seeking comment.
Detailed plans
“All the RAs will probably be given another week to submit formal EoIs and the bank guarantees,” said the first person cited above. “The detailed plans could be submitted till the current timeline, which ends on February 4, which can of course be extended depending on the seriousness of the applicants.”
Go First owes creditors more than ₹6,200 crore. Central Bank of India, Bank of Baroda and IDBI Bank are the secured creditors with ₹1,934 crore, ₹1,744 crore and ₹75 crore of admitted claims, respectively.
The RP can extend the corporate insolvency resolution process (CIRP) by another 60 days and still comply with the insolvency code’s outer deadline of 330 days after the current timeline ends on February 4. Lenders are still sceptical of getting any strong bids given that the airline has been struggling for more than nine months amid a tussle with aircraft lessors and a legal battle with engine maker Pratt & Whitney.
They are also doubtful about the financial position of the new bidders.
Court battle with lessors
Airplane lessors have taken Go First to the Delhi High Court, seeking deregistration of the planes since the leases were terminated prior to the declaration of the moratorium on May 10. The court is yet to pronounce its judgement in the case. The Directorate General of Civil Aviation (DGCA) said in an affidavit that the recent order exempting aviation leases from the bankruptcy moratorium should apply even to companies undergoing insolvency proceedings.
Lenders are pursuing arbitration proceedings in Singapore against P&W, continuing the process started by Go First’s erstwhile management seeking more than $1 billion from the company, blaming it for supplying faulty engines that were not replaced on time, resulting in the grounding of half the airline’s fleet and pushing it toward bankruptcy.
