Lenders to Go First are expected to declare its account as a Non-Performing Asset (NPA) this quarter. Nonetheless, the exposure is secured with Wadia-owned clear-sanctioned land as collateral.

Banking sources have also said that the NCLT’s insolvency admission order is at par with their expectations, although, lessors’ NCLAT application will delay its resolution.

Meanwhile, SMBC Aviation Capital has approached the appellate tribunal, claiming that they had terminated the aircraft leases prior to the moratorium being granted by the NCLT. They have requested the NCLAT to instruct the IRP to refrain from taking possession of the aircraft.

Also read: Go First promoters may find it tough to regain control of airline

businessline spoke with multiple lenders. A senior banker said, “We were hoping the insolvency admission takes place as it protects the airline’s assets. It is in our favor, as well as the airline’s. However, the lessors’ attempt to challenge the verdict may prolong the legal process and hinder a fruitful resolution.”

The airline’s total liabilities to all creditors stood at ₹11,463 crore, which includes dues to banks, financial institutions, vendors and aircraft lessors. Of these, the amount owed to financial institutions stood at ₹6,521 crore. The company has defaulted on payments to operational creditors, including ₹1,202 crore to vendors and ₹2,660 crore to aircraft lessors.

When asked if they planned to declare the airline’s account as an NPA, one of the persons quoted above said: “Yes, we will have to declare the account NPA in this quarter. We have made provisions for the same. Not only that, we are also secured by a land collateral owned by the Wadia Group. It’s a clear land. Not only that, a part of the loan is also government guaranteed, unlike Jet.”

Also read: NCLT admits Go First’s insolvency petition, appoints IRP

With the moratorium kicking in, the lessors are hopeful of a resolution unlike in the case of Jet Airways. Go First’s lenders include Central Bank of India, IDBI Bank, Bank of Baroda, and Deutsche Bank, among others. 

During the hearing of their plea on May 11, SMBC Aviation Capital raised concerns about not being notified before Go First’s plea was admitted and not having the opportunity to voice their objections on record.

SMBC Aviation Capital claimed that Go First’s leases were terminated prior to the NCLT granting a moratorium, and that the lessor had retaken possession of the aircraft and made an application to the DGCA.

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