The Directorate General of Civil Aviation (DGCA) has asked Go First to come up with a plan to resume its services after getting approval from the committee of creditors (CoC), Financial Express (FE) reported. The aviation regulators clarified that the plan needs to be approved by the CoC before it takes it into consideration.
The CoC is expected to meet on Friday for their first meeting. Primary lenders to the troubled airline include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. According to its submission to the National Company Law Tribunal (NCLT), GoFirst owes Rs 6,521 crore to its creditors. The report said the airline also owes payments to its vendors, and the total money due on the carrier goes up to Rs 11,463 crore.
Earlier, the interim resolution professional (IRP) had submitted a six-month revival plan to the aviation regulator. In the plan, the IRP had stated that GoFirst could resume its operations by using its 26 operational aircraft and 400 pilots, the FE report said.
The curious case of GoFirst's insolvency plea
When a company does not honour its financial obligations to its creditors, banks approach the NCLT with an insolvency plea against the firm. Subsequently, the IRP invites bids to set up a resolution plan. These bids are then placed before the CoC for evaluation and approval. The CoC analyses these bids and votes to approve the plan that offers them the best value.
However, in the case of GoFirst, it was not the creditors, but GoFirst itself approached the NCLT to file for voluntary insolvency. This cannot be called a case of default since GoFirst had not defaulted on payment to the financial creditors till then. Because of this, the carrier is eligible to come up with its own resolution plan. However, in any case, the plan has to be approved by the CoC.
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Legal experts following the developments told FE that since there is no previous case of a company filing for voluntary insolvency, the DGCA wants the CoC to approve the resolution plan before it takes any decision.