Delhi NCLT Extends Deadline for Go First Airlines Insolvency Resolution
Updated On : April 10, 2024
In a significant move, the National Company Law Tribunal (NCLT) in Delhi has offered a lifeline to Go First Airlines by extending the deadline for completing its corporate insolvency resolution process (CIRP) by an additional 60 days. The extension, which prolongs the process until June 3, comes after the airline hit the 330-day maximum period for resolution on April 4, underscoring the need for additional time under extraordinary circumstances.
The decision by a bench that included judicial member Mahendra Khandelwal and technical member Sanjeev Ranjan reflects the Tribunal's dedication to protecting stakeholder interests. It provides the airline with crucial time to finalize a comprehensive resolution strategy.
According to the Insolvency and Bankruptcy Code (IBC), insolvent companies are initially given 180 days to resolve insolvency, with the possibility of an extension of up to 90 days, culminating in a 330-day total period. Yet, the NCLT can allow a further 60-day extension in exceptional cases, a flexibility underscored by the Supreme Court's ruling in the Essar Steel case, which removed the rigid 330-day limit.
Facing imminent insolvency as the deadline approached, Go First Airlines, with legal representation from Khaitan & Co, petitioned the NCLT for this critical extension. The near-finalization of two resolution plans influenced the Tribunal’s decision to grant additional time beyond the standard limit, indicating forward movement in the airline’s restructuring efforts.
Go First Airlines' push for voluntary insolvency was driven by severe financial losses, primarily blamed on defective engines supplied by Pratt & Whitney (P&W). The carrier experienced an increase in aircraft groundings due to engine issues, rising from 31% in 2020 to over 50% by April 2023, which led to financial setbacks amounting to more than ₹10,800 crore.
Since admitting the airline’s plea for insolvency on May 10 and declaring a complete moratorium, the NCLT's recent extension highlights the challenges in resolving complex insolvency issues and the need for a flexible, pragmatic approach in extraordinary situations.
This extended resolution period offers a glimmer of hope for Go First Airlines and its stakeholders, who eagerly await a successful restructuring plan that could steer the company towards recovery and stability.
Delhi NCLT Extends Deadline for Go First Airlines Insolvency Resolution
April 10, 2024
In a significant move, the National Company Law Tribunal (NCLT) in Delhi has offered a lifeline to Go First Airlines by extending the deadline for completing its corporate insolvency resolution process (CIRP) by an additional 60 days. The extension, which prolongs the process until June 3, comes after the airline hit the 330-day maximum period for resolution on April 4, underscoring the need for additional time under extraordinary circumstances.
The decision by a bench that included judicial member Mahendra Khandelwal and technical member Sanjeev Ranjan reflects the Tribunal's dedication to protecting stakeholder interests. It provides the airline with crucial time to finalize a comprehensive resolution strategy.
According to the Insolvency and Bankruptcy Code (IBC), insolvent companies are initially given 180 days to resolve insolvency, with the possibility of an extension of up to 90 days, culminating in a 330-day total period. Yet, the NCLT can allow a further 60-day extension in exceptional cases, a flexibility underscored by the Supreme Court's ruling in the Essar Steel case, which removed the rigid 330-day limit.
Facing imminent insolvency as the deadline approached, Go First Airlines, with legal representation from Khaitan & Co, petitioned the NCLT for this critical extension. The near-finalization of two resolution plans influenced the Tribunal’s decision to grant additional time beyond the standard limit, indicating forward movement in the airline’s restructuring efforts.
Go First Airlines' push for voluntary insolvency was driven by severe financial losses, primarily blamed on defective engines supplied by Pratt & Whitney (P&W). The carrier experienced an increase in aircraft groundings due to engine issues, rising from 31% in 2020 to over 50% by April 2023, which led to financial setbacks amounting to more than ₹10,800 crore.
Since admitting the airline’s plea for insolvency on May 10 and declaring a complete moratorium, the NCLT's recent extension highlights the challenges in resolving complex insolvency issues and the need for a flexible, pragmatic approach in extraordinary situations.
This extended resolution period offers a glimmer of hope for Go First Airlines and its stakeholders, who eagerly await a successful restructuring plan that could steer the company towards recovery and stability.
