Go First's insolvency petition accepted by NCLT, temporary ban on employee layoffs imposed
The NCLT's latest ruling on Go First's bankruptcy proceedings has elicited mixed feelings of relief and ambiguity. Despite grappling with a substantial debt crisis, the airline has been given legal protection and permission to sustain its operations by the NCLT. Nevertheless, the tribunal has imposed a restriction on employee layoffs, thereby casting doubt on the fate of numerous workers.
Abhilash Lal has been appointed as the interim professional by the NCLT bench, led by Chairperson Justice Ramalinga Sudhakar and Justice LN Gupta, to oversee the airline's operations during the insolvency proceedings.
The suspended board has been directed to support the resolution professional. Nevertheless, employees remain concerned due to the substantial debt of the company, which amounts to Rs 11,463 crore, including Rs 3,856 crore in defaults.
Go First's own insolvency petition sheds light on the significant financial difficulties the company is currently experiencing. The airline attributes a major portion of its challenges to its engine supplier, Pratt & Whitney, claiming that 50 percent of its aircraft are grounded due to engine supply problems. Furthermore, as of April 30, the company has outstanding debts of Rs 2,600 crore to aircraft leasing companies and Rs 6,521 crore to financial creditors.
After considering the arguments presented by various airlines, including Wadia Group's aviation company and aircraft leasing companies, the NCLT arrived at its decision. These airlines had opposed the petition and called for interim protection.
The NCLT had previously acknowledged that the Insolvency and Bankruptcy Act does not include provisions for an interim moratorium. If the petition is approved, only an Absolute Moratorium can be put into effect.
Although Go First and its employees have been granted the relief of legal protection and the opportunity to continue their operations, there is still an air of uncertainty surrounding their future.