Go Airlines (India) Ltd, the parent company of Go First carrier, has been dealing with a challenging situation as it faces insolvency. The airline recently received claims amounting to 240 billion rupees ($2.9 billion) from both operational and financial creditors. This development is in line with the procedural requirements under Indian law, which grant every creditor the right to payment and remedy by submitting claims when a company undergoes bankruptcy. The claims are currently being reviewed for their authenticity by the resolution professional overseeing the insolvency process.
The ongoing insolvency process has led to a significant influx of claims from various creditors. As of now, the claims amount to a staggering 240 billion rupees. Among the creditors, lenders’ claims account for about 50 billion rupees, while lessors’ claims make up the remaining 180 billion rupees. The claims have been submitted in adherence to the legal requirements, and the resolution professional is responsible for meticulously verifying their authenticity.
Officials from several banks, who are part of the committee of creditors involved in Go Airlines’ insolvency, have provided insight into the claims’ breakdown. However, they preferred to remain anonymous due to the sensitive nature of the matter and the absence of authorization to speak to the media on the issue.
Go Airlines encountered severe financial difficulties, leading to the grounding of approximately half of its 54 Airbus A320neos. The airline attributes the grounding to “faulty” Pratt & Whitney engines. However, the engine manufacturer, owned by Raytheon, has refuted these claims and deemed them baseless. The situation further deteriorated, prompting Go Airlines to file for bankruptcy protection in May, seeking a way out of its financial predicament.
In an attempt to explore potential solutions, the company, through a court-appointed administrator, invited investor interest in its assets. The process allowed prospective bidders to submit an expression of interest (EoI) for consideration. However, as of now, the company has received 40 queries regarding EoIs from potential investors, but no formal submissions have been made.
Despite the ongoing insolvency process, there is still hope for Go Airlines to resume operations. The aviation regulator has outlined certain conditions that the airline must meet to regain the ability to fly again. These conditions include securing interim funding and obtaining approval for its flight schedule.
To fulfill the requirements set by the aviation regulator and resume operations, Go Airlines’ resolution professional is waiting for the banks to disburse funds. Last month, the banks gave in-principle approval for the disbursement, but the actual funds are yet to be released. Once the funds are available, the resolution professional can proceed with the necessary steps to get the airline back in the air.
Go Airlines (India) Ltd’s ongoing insolvency process has brought about an influx of claims from creditors, amounting to 240 billion rupees ($2.9 billion). The company is diligently reviewing these claims to determine their authenticity. Despite its financial challenges, Go Airlines is actively seeking potential investors to support its revival. With conditional approval from the aviation regulator and pending disbursement of funds from banks, the company remains hopeful to take flight once again. However, the resolution of its insolvency and the revival of its operations will depend on various factors, including the veracity of the submitted claims and the successful engagement of investors.
