The Delhi Bench of National Company Law Tribunal (NCLT) on Thursday reserved order for the Wadia Group-owned Go First’s plea seeking interim moratorium and admission of insolvency under the Insolvency and Bankruptcy Code (IBC). This came after at least three lawyers representing multiple lessors opposed the plea.

The hearing went on for four hours. Senior Advocate Neeraj Kishan Kaul, a battery of lawyers from Khaitan and Co, Go First CEO, Kaushik Khona were present at the hearing. Kaul submitted that the airline was not looking for liquidation. He said the company wasn’t before the tribunal because of “bad corporate governance”, but due to Pratt & Whitney’s unserviceable engines that led to the grounding of 28 of its 54 aircraft fleet. “We are approaching the tribunal to seek a resolution, because we are capable of reviving it. We are not looking at a liquidation,” Kaul said.

Read: Go First says it owes ₹11,000 crore to creditors

Kaul argued that the airline had not defaulted to its financial creditors till April 30, but from then to now, there is a default of ₹11 crore. However, it did owe money to the lessors. He further mentioned that the airline’s consortium account had been frozen. Go First also pleaded with the tribunal to direct the lenders to unfreeze them so that costs could be met.

Senior Advocate Arun Kathpalia appeared on behalf of a group of lessors and argued that the aircraft were, in fact, the property of the lessors and Go First has already defaulted on payments. He urged the bench to grant the lessor time to file a statement of objections.

Additional cost

According to Katpalia, if the moratorium was implemented, it would be an additional cost for the airline because it would continue to accrue lease rentals adding to the costs of the insolvency process. During the course of the hearing, two other lawyers appearing on behalf of a lessors too sought time for arguments and preservation of the assets. 

However, Kaul argued, the airline was not looking to keep the aircraft grounded. It had in fact received an arbitral award in its favour under which P&W was to give 10 serviceable engines every month between April and December. 

The airlines further sought a direction from the NCLT that an ad-interim relief be provided in the form of an interim moratorium if NCLT doesn’t admit the plea on May 4.

The bench reserved the order. 

Refunds to passengers

Meanwhile, the Directorate General of Civil Aviation (DGCA) examined Go First’s response and ordered the carrier to process their refunds to passengers. According to the airline, it has cancelled 4,118 flights affecting over 77,000 passengers.

Read: Airfares likely to rise as Go First cancellations reduce capacity: TAAI

In the statement, DGCA also said that Go First has intimated that they have suspended the sale of their flights till May 15, 2023, and are working to refund or reschedule for future dates, the passengers already booked to fly with them.

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