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Business News/ Companies / Go First tells Delhi HC it has exhausted CoC funds
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Go First tells Delhi HC it has exhausted CoC funds

The bankrupt airline, staring at a likely liquidation, had received interim financing for service maintenance costs

Go First is battling legal disputes with aircraft lessors as well as challenges arising from government notifications impacting asset reclamation during moratorium. (ANI) Premium
Go First is battling legal disputes with aircraft lessors as well as challenges arising from government notifications impacting asset reclamation during moratorium. (ANI)

NEW DELHI : Go First on Thursday informed the Delhi High Court that it had exhausted the funds provided by the Committee of Creditors and was dealing with a shortage of manpower and financial constraints. The airline had received interim financing of Rs100 crore from the CoC for service maintenance costs.

The resolution professional (RP) overseeing the bankrupt airline’s insolvency also told the court that Go First’s lessors had been blocking it from reviving its operations by filing petitions seeking the deregistration of its aircraft.

The court has deferred the hearing to 5-7 December. It had concluded hearing the lessors’ arguments and is currently concluding the RP’s arguments.

Go First is battling legal disputes with aircraft lessors as well as challenges arising from government notifications impacting asset reclamation during its moratorium period. The government, through a notification, allowed a moratorium under the insolvency process, but this will not apply to leased assets, including aircraft and engines.

Go First plans to scout for litigation finance to bring home up to Rs12,000 crore tied up in various lawsuits, Mint reported earlier on Thursday, as the bankrupt airline stares at likely liquidation. The amount includes an arbitration award that it won against engine maker Pratt and Whitney at the Singapore International Arbitration Centre earlier this year.

The airline received a temporary reprieve on 23 November when the National Company Law Tribunal (NCLT) granted it a 90-day extension for its Corporate Insolvency Resolution Process, effective from 6 November to 4 February, to allow for revival of its operations. 

The tribunal has warned that failure to conclude the process within the new timeframe may trigger liquidation proceedings.

In the Delhi High Court, the lessors are pressing for immediate release of their aircraft citing the government notification and clarification from the Directorate General of Civil Aviation on the moratorium. 

Senior Lawyer Neeraj Kishan Kaul, representing the RP, emphasised during Thursday's hearing that the government notification did not explicitly state its retrospective nature. If it is not retrospective, Kaul argued, the notification should be considered proactive.  

He also contended that the Delhi High Court was not the appropriate forum to decide on the applicability of the moratorium, and that such decisions should be within the jurisdiction of the NCLT. 

Kaul said the Insolvency and Bankruptcy Code (IBC) was designed to revive corporate debtors, with the correct jurisdictional route being NCLT, followed by the National Company Law Appellate Tribunal (NCLAT), and ultimately the Supreme Court.

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Published: 30 Nov 2023, 07:36 PM IST
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