NCLT imposes moratorium on Go First airline's financial obligations

In a major relief to cash-strapped Go First, the National Company Law Tribunal on Wednesday admitted its plea for voluntary insolvency resolution proceedings and imposed a moratorium on the airline's financial obligations that bars lessors from taking back aircraft. The tribunal's ruling, which was reserved on May 4, caps more than a week of uncertainty for the crisis-hit carrier, which has more than 7,000 employees on its rolls, and also comes against the backdrop of lessors moving to deregister at least 45 planes of the airline. Besides, the Interim Resolution Professional (IRP) Abhilash Lal -- who will be in charge of the affairs of the airline as the board has been suspended -- has been directed not to retrench any employees.

This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate its contracts and debts. The low-cost carrier, which until recently was India's fourth-largest airline by passengers flown, filed for bankruptcy protection, blaming "faulty" Pratt & Whitney engines for the grounding of about half its 54 Airbus A320neos. The US engine maker, part of Raytheon Technologies, has called the claims without evidence.

Calling the order a "perfect example" in the context of reviving a viable business before it becomes unviable, Go First CEO Kaushik Khona told news agency PTI that it was "historic". The crucial decision comes at a time when foreign lessors, including major global names such as Jackson Square Aviation, SMBC Aviation Capital, and CDB Aviation's GY Aviation Leasing, are trying to repossess 40 Go First planes over missed rental payments. Any such recoveries are prohibited once bankruptcy proceedings are initiated for a company.