GoFirst1Image Credit source: File Photo
The Wadia Group may seek exemption from Insolvency and Bankruptcy Code (IBC) rules that bar promoters from bidding for their companies as the cash-strapped carrier’s account with banks is still marked as standard. Defaulters are barred from submitting a resolution plan for an insolvent company under section 29A of the IBC if they have been in default with banks for more than 12 months and the account has been classified as a non-performing (NPA) asset is classified.
In order to promote financial discipline among borrowers, such rules were introduced to prevent defaulters from gaining control of their companies after their companies go bankrupt. These rules prevented several large corporate houses such as Essar, Videocon and Bhushan Power and Bhushan Steel from gaining control of their companies.
Go First had said this in the petition
According to sources, operational creditors such as vendors, lessors and travel agents are meeting to discuss the future course of the airline business, adding that if the promoters are willing to take a cut, they may withdraw the insolvency petition. The airline, in its plea before the court, said that its total liability to all creditors was Rs 11,463 crore, including dues to banks, financial institutions, vendors and aircraft lessors. Out of this, the outstanding amount of financial institutions is Rs 6,521 crore.
The promoters first approached the equity market, then the debt market and now this is the last resort so that the creditors have to take a cut, thereby reducing the airline’s debt. Because Vidya Group wants to be in the airline business.
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no plans to leave the airline
CEO Kaushik Khona had said on Wednesday that the owners have no plans to leave the airline. The Wadia Group has no intention of exiting the airlines. However, the lessees say they were wary of the move by the group and would not want to continue doing business with the company. Eight lessors have approached aviation regulator DGCA to cancel the registration of 23 aircraft of the airline.
Some of the lessors that have chartered aircraft to Go First include SMBC Capital Aviation, GAL, CDB Aviation, Sonoran Aviation Company and MSPL Aviation. He urged the National Company Law Tribunal not to ban possession of assets like aircraft.