While this would give the grounded airline more time to stage a revival, it could further delay the return of aircraft to its lessors, who have pleaded for this in several courts.

The airline is reportedly preparing to approach the National Company Law Tribunal (NCLT) to extend its moratorium period for an additional 60 days, as it has attracted interest from Sharjah-based aviation company Sky One, Africa-focused Safrik Investment, and SpiceJet.

In November 2023 the NCLT granted Go First a 90-day extension – until 4 February – to finalise the insolvency process after the airline failed to present a viable revival plan. With the expiry of this extension on Sunday, Go First has completed 270 days of the process. According to provisions, it is entitled to seek an extension of up to 330 days.

Go First filed for bankruptcy protection in May 2023, blaming Pratt & Whitney engine failures for its financial woes. It has since failed to fly again due to challenges posed by lessors or administrative challenges such as frequent changes of benches in the NCLT. The last effective hearing was in November.

Debarshi Dutta, Partner at Solaris Legal, explained, “If the resolution professional in this case seeks an extension of up to 60 days, the NCLT is likely to allow it as that will be within the overall IBC-mandated 330-day limit.”

Anoj Menon, partner at Desai and Diwanji, said he expected NCLT Delhi to extend the period up to 330 days, especially considering reported interest from one of India’s leading industrialists in submitting a resolution plan.

The additional 60-day extension would represent the final opportunity for Go First’s resolution professional to revive the airline within the 330-day period. Beyond this, liquidation may be the only viable option. Nevertheless, legal experts suggest that NCLT could grant extensions even beyond the 330-day limit in exceptional cases.

Yogendra Aldak, partner at Lakshmikumaran and Sridharan, said, “While the ordinary CIRP period is 330 days, extensions can be granted in reasonable and exceptional circumstances, especially in cases where it is expected to attain finality shortly.” He added that the NCLT had the authority to exclude certain periods when calculating the total duration, such as times when the process was stayed or set aside by a court.

Debarshi Dutta highlighted that the NCLT keeps in mind the larger interests of all stakeholders to prevent a company from being pushed into liquidation if there is a realistic prospect to revive it. Dutta further cited examples such as the Essar Steel case, in which the Supreme Court extended the period beyond 330 days.

The extension of Go First’s insolvency resolution would have huge significance for the airline’s aircraft and engine lessors, who have been seeking immediate repossession of their grounded aircraft and engines in both the NCLT and the Delhi High Court.

“In this case, if the process is unsuccessful and the moratorium ends, and Go First proceeds to liquidation, since the leased aircraft will not form part of the liquidation estate (as per section 36 of the IBC), the lessors should be able to take back their aircraft. If the moratorium comes to an end, the moratorium order which has been questioned before the Delhi High Court will no longer impact the lessors. Hence, the litigation before the Delhi High Court may well become unnecessary. After taking back their aircraft, the lessors would still be entitled to pursue their claims as operational creditors of Go First in the liquidation process,” said Anoj Menon.

However, Yogendra Aldak said that thanks to the recent government notification that exempts transactions relating to aircraft from the moratorium, lessors’ case is stronger. They are no longer required to wait for the conclusion of the moratorium period or insolvency process to repossess their aircraft.

The uncertainty around Go First’s future remains as no resolution plan has surfaced in 270 days of the insolvency resolution process. However, there have been expressions of interest from various potential buyers. According to media reports, SpiceJet promoter Ajay Singh, Sharjah-based aviation company Sky One, and little-known Busy Bee are the three entities that have submitted the ₹5-crore bank guarantee and a formal expression of interest to take over the grounded airline.

Earlier, there was interest from Jindal Power, owned by billionaire Naveen Jindal. However, the firm reportedly withdrew its bid after evaluating the airline’s financial statements.

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Published: 04 Feb 2024, 12:20 PM IST