Go First looks at external funding for contingency plan

economictimes.indiatimes.com:

The airline had filed for voluntary insolvency proceedings on May 3 before the Mumbai bench of the NCLT, attributing the decision to protracted delays in sourcing airworthy engines from Pratt & Whitney (P&W). The Insolvency and Bankruptcy Code (IBC) provides for priority funding after a company has been admitted in NCLT at higher rates. This is considered in corporate insolvency resolution process (CIRP) costs and remains above banks' in the priority list of repayment, people familiar with the matter said.Bank of Baroda (BoB) and Central Bank of India (CBI), the two lead lenders for the grounded airline, have in principle agreed to lend Rs 450 crore, but needs approval from their board.

The process to take permissions is also longer because the company is classified as a non-performing asset. “Hence finding an alternative source of funds is necessary so that procedural issues do not impact the revival, leading to deterioration of assets,” said a person aware of the discussions. EY’s Shailendra Ajmera, the carrier’s resolution professional, and individual lenders could not immediately be reached for their comments.Bank funding likelyHowever, a second person said that it’s most likely that Go First’s existing lenders will fund the revival as chances of an external institution investing without security is low.

“The funding plan from lenders is clear. They are encouraged by the approval given by the DGCA. While as part of the process, it is necessary to examine other sources of funds, BoB and CBI will fund it,” the person said.