Seeking Expression of Interest for the Potential Sale of Go Airlines

An advertisement published in ET on Monday revealed that a resolution professional, who has been assigned to manage the insolvency proceedings of Go Airlines (India) Ltd, is now soliciting Expressions of Interest for the sale of the airline. Interested parties are invited to submit their proposals by August 9, as stated in the advertisement.

The Expression of Interest (EOI) process marks the official initiation of the search for prospective buyers or investors, in compliance with the regulations stipulated by Indian law.

Go Airlines

In May, the airline company sought bankruptcy protection, attributing the grounding of approximately half of its 54 Airbus A320neo planes to “defective” Pratt & Whitney engines.

However, the engine company disputed the airline’s claims, stating that they lacked validity.

Citing Abhirup Dasgupta, a partner at HSA Advocates, the news agency Reuters reported that as per regulations, the issuance and publication of Form G, which pertains to the invitation for Expression of Interest (EOI), would be the prescribed next step to bring the insolvency process to its logical conclusion.

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Meanwhile, there is growing concern among lenders regarding the Delhi High Court’s order, which prohibits the airline from removing any parts from the aircraft it intends to fly.

The lessors, who own the aircraft, are now facing a predicament as the National Company Law Tribunal (NCLT) has imposed a ban on reclaiming the aircraft during the ongoing IBC process.

Initially, the committee of creditors approved funding of Rs 425 crore. However, they are now apprehensive that this requirement might impede business operations.

On Friday, the resolution professional, Shailendra Ajmera, filed an appeal in the Delhi High Court to challenge the aforementioned order.

Insolvency Proceeding in the NCLT

Go First, the airline in question, ceased operations and sought insolvency proceedings in the National Company Law Tribunal (NCLT) on May 2 due to financial difficulties. The grounding of more than half of its 54 planes resulted from supply issues with the engines provided by an American manufacturer.

The indebted airline is in debt to creditors, with the Central Bank of India being the leading creditor, owed more than Rs 6,500 crore. The Central Bank holds outstanding loans amounting to Rs 1,987 crore, including approximately Rs 650 crore of emergency credit acquired after the Covid-19 pandemic.

According to a previous report by ET, the forthcoming ruling from the Singapore arbitration court, expected later this month, holds crucial significance for Go First’s survival.

Insiders familiar with the process have informed the newspaper that if the court fails to grant Go First relief and compel Pratt & Whitney (P&W) to replace the defective engines, the airline will be unable to operate, potentially jeopardizing the entire recovery process.

Although the Singapore International Arbitration ruling mandated P&W to deliver approximately 20 engines by December 2023, the engine manufacturer subsequently contested the decision, citing non-payment by the airline and the ongoing global supply chain shortage. In a petition reviewed by ET, P&W claims that the airline owes them over $100 million.

A reliable source knowledgeable about Go First’s business plan revealed that current projections indicate a minimum of six engine failures by November 2023.

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