NCLT court reserves order on Go First's plea seeking interim moratorium

By Shailesh Yadav
New Delhi [India], May 4 : Beleaguered Wadia Group airlines, Go First, on Thursday pleaded to the National Company Law Tribunal (NCLT) here for an interim moratorium after facing an acute cash crunch. The airline has also sought direction to appoint an insolvency resolution process (IRP) for the betterment of the Go First.
The NCLT, after the hearing, reserved its order on Go Airlines' plea.
According to the Insolvency and Bankruptcy Code (IBC), the effect of such an interim moratorium is that all pending legal proceedings with respect to any 'debt' are deemed to have been stayed.
"We are reserving the order," said the NCLT two-judge bench of the Delhi office, headed by Justice Ramalingam Sudhakar, and a technical member LN Gupta.
Crisis-hit Go First had sought various interim directions from the NCLT bench, including restraining lessors from taking back aircraft, and regulator Directorate General of Civil Aviation (DGCA) from taking any adverse action against the airline.
It is to be noted that the Wadia group-owned airline has liabilities worth around Rs 11,000 crore.
Senior Advocate Neeraj Kishan Kaul, representing Go First Airlines, said that it has filed a section 10 petition under the IBC - (Insolvency and Bankruptcy Code). Every condition has been satisfied. Promoter has invested around Rs 290 crore amount of money in April 2023.
"The objective of the IBC is to ensure that a company is having some going concern and not ground it," Kaul told the NCLT.
During the course of the hearing, Kaul pleaded to the NCLT Court that there was a scope for the company to be revived and requested that the interim moratorium be granted. The airline also accepted that it is going through a huge financial crisis.
Kaul also told the NCLT bench that the lenders are moving to freeze accounts and lessors are terminating agreements. There is a huge scope for revival since fundamentals are in place.
Go First Airlines further told the NCLT bench that it was there (at the NCLT) because of the engine supplier, otherwise, it had an impeccable financial record in every aspect.
"The purpose of the IBC is revival, have not engineered a financial default at all. The lenders are moving to freeze accounts, lessors are terminating agreements, Go Airlines told the NCLT bench and sought appropriate directions and orders on the issue, it faced," Kaul said.
Go First further sought a direction from the NCLT that an ad-interim relief be provided in the form of interim moratorium, if NCLT doesn't admit plea today.
Go First said that its bank account with the consortium is frozen, and it pleaded to the NCLT Court to defreeze its bank account.
Go First Airlines said that this is not a case of a malicious petition to avoid payment of dues.
According to the petition before the NCLT, the budget airline has sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions.
Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company.
However, aircraft lessors opposed the airline's request, saying that insolvency proceedings cannot be initiated without hearing them.