Go First crisis: Lenders take full control of airline’s resolution process, says report

The airline has faced multiple roadblocks since the initiation of insolvency proceedings. While it has managed to dodge a few bullets along the way, it remains in a precarious position financially and has also failed to resume operations.

Go First's lenders have replaced key bankruptcy professionals. 

By India Today Business Desk: Beleaguered low-cost airline Go First’s creditors have taken full control of the ongoing resolution process after its bankruptcy plea was approved by the National Company Law Tribunal (NCLT).

The committee of creditors (CoC) has replaced key bankruptcy professionals, who were appointed by the airline early, to take the process forward, reported The Economic Times.

In a meeting held Friday, the CoC replaced the company-appointed interim resolution professional (IRP), process advisor and legal agency and took over control of the process, added the report.

The report indicated that the CoC is expected to file more changes before the NCLT this week, with A&M being replaced as the process advisor by EY, and J Sagar Associates being appointed as the legal advisor to the CoC.

It also suggested that Trilegal, the IRP’s legal advisor, will also be replaced; firms such as Shroff & Co, Luthra & Luthra and Cyril Amarchand Mangaldas are in contention. A person familiar with the process told ET that lenders “were a bit apprehensive about continuing with the same support firms appointed by the company”.

“They didn't want to take a chance about questions being asked later, so it was thought best to change everybody,” said the person.

One of the reasons why the CoC is making these changes is to ensure no conflict of interest. Therefore, any advisor or firm that has served the promoters or the management previously is being replaced, said the report.

It may be noted that cash-strapped Go First owns creditors led by the Central Bank of India more than Rs 6,500 crore. Go First's total dues stand at over Rs 11,000 crore.

The airline has faced multiple roadblocks since the initiation of insolvency proceedings. While it has managed to dodge a few bullets along the way, it remains in a precarious position financially and has also failed to resume operations.

Lenders are worried about the delay in resuming operations, as it has already started impacting the airline’s reputation among its existing employees and customers.

The airline has postponed operations over six times since seeking bankruptcy protection. Its operations will remain suspended till June 14, as per the latest announcement.