The lenders of Go First, an insolvent Indian airline, are set to vote on a liquidation proposal, according to two anonymous banking sources. This comes after the bidding deadline for the company passed without any interested parties. The proposal to liquidate the airline is under consideration, and each lender will present it to their respective boards for a final vote within 10-15 days.
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A state-run bank banker, who has exposure to Go First, mentioned that there seems to be no interest from potential suitors, and the lenders are leaning towards liquidation instead of restarting the insolvency process. The Committee of Creditors convened on Wednesday and Thursday to determine the airline's next steps. The resolution professional overseeing Go First's insolvency process did not immediately respond to a request for comment.
Go First, which sought bankruptcy protection in May, owes its creditors a total of 65.21 billion rupees ($785.6 million). Its creditors include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. Jindal Power, the only company whose takeover interest was accepted by the creditors, decided not to proceed with a bid. The second banker stated that liquidation appears to be the only feasible option for the banks due to legal complications deterring potential suitors.
As there is collateral backing the loan, it is deemed more beneficial to opt for liquidation rather than investing more in the insolvency process. Go First is also embroiled in a legal dispute with its lessors due to a moratorium imposed by Indian courts that prevents them from reclaiming planes. A recent amendment to India's insolvency laws permits lessors to repossess the planes, but it remains to be seen whether this change can be applied retrospectively to Go First.