NCLT Orders Liquidation of Go First Airways

SN Thyagarajan (Bar and Bench) 20 January 2025

Economy & Nation

The National Company Law Tribunal (NCLT) on Monday ordered the liquidation of budget air carrier Go First Airways.

A bench of NCLT comprising Judicial Member Mahendra Khandelwal and Technical Member Dr Sanjeev Ranjan allowed an application for liquidation filed by the Committee of Creditors (CoC) of Go First.

“Liquidation is ordered," the NCLT said.

A detailed copy of the order is awaited.

On May 2, 2023, Go First filed a voluntary plea under Section 10 of the IBC, seeking admission to the Corporate Insolvency Resolution Process (CIRP). The NCLT admitted the application on May 10, appointing a Resolution Professional (RP) to manage the airline's affairs.

In response, the airline's lessors appealed to the National Company Law Appellate Tribunal (NCLAT), arguing that their assets had been unfairly retained under the moratorium despite the termination of leases before the proceedings began.

On May 22, 2023, the NCLAT upheld the NCLT's decision and directed the lessors to seek clarification regarding the moratorium from the NCLT.

The lessors subsequently approached the Delhi High Court, urging the Directorate General of Civil Aviation (DGCA) to deregister their aircraft. Initially, the DGCA resisted, citing the moratorium.

However, on October 4, 2023, the Ministry of Corporate Affairs clarified that Section 14(1) of the IBC would not apply to transactions involving aircraft, engines, airframes or helicopters.

The DGCA then submitted an affidavit before the Delhi High Court affirming that the exemption should apply to pending cases but deferred action on Go First’s case, citing its sub judice status.

On April 26, 2024, the Delhi High Court ordered the DGCA to deregister the airline’s fleet, which was completed by early May 2024. Maintenance and export of the deregistered aircraft were assigned to the lessors under Rule 32A of the Aircraft Rules.

Faced with no aircraft and no viable revival options, the CoC decided in September 2024 to liquidate the company and filed the application for the same.

In October 2024, the bench had raised apprehensions about permitting the company’s Resolution Professional (RP) Shailendra Ajmera to be its liquidator.

Subsequently, the CoC named Dinkar Venkatasubramanian as its liquidator.

The CoC was represented by advocate Vishnu Sriram.

The Resolution Professional was represented by advocate Diwakar Maheshwari.

Courtesy: Bar & Bench

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