Buyers’ apathy, change in IBC spur Go First liquidation fear
MUMBAI : Bankrupt airline Go First is staring at a potential liquidation or torturous recovery given the lack of buyers’ interest, fleet uncertainty and mounting costs, two people aware of the matter said. Meanwhile, its lenders plan to seek more time for a rescue since only one candidate has shown interest in the airline so far. Go First’s revival was clouded further by a 3 October government notification that said leased aircraft and engines would not come under the bankruptcy moratorium.
If applied retrospectively, this implies a lessor can potentially take away its 53 leased aircraft, snuffing out any chance of revival. “Strictly going by the way the ministry of corporate affairs (MCA) and the directorate general of civil aviation (DGCA) are treating the situation at Go First, liquidation seems to be the only direction the airline is headed for. It’s only a matter of time," said one of the people cited above.
Still, creditors will first seek an extension of the resolution deadline after a Delhi high court verdict on 3 November in a case between the airline and its lessors, the people said. The 3 October announcement was meant to comply with the Cape Town Convention, control rental costs and prevent higher fares. “We have to see whether this rule will be applied prospectively or retrospectively, but the government’s direction is clear," the first person said.
“We have to see how the court handles the case. But, even if it is applied prospectively, the aircraft in Go First are deteriorating fast, which will demand more money than expected if a revival is desired. Will a buyer or existing stakeholders be willing to spend that extra money for the already-indebted airline?" said the first person.
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