NCLT seeks approval of Go First lenders for ticket refund plan

New Delhi: The National Company Law Tribunal (NCLT) has sought the consent of the Insolvency and Bankruptcy Board of India (IBBI) and the Committee of Creditors (CoC) on Go First’s plan to refund money to passengers booked on their flights post 3 May – the day airline suspended operations.

The refund plan, submitted by Go First management led by the Resolution Professional (RP), includes a mix of payment via credit notes issued to travel agents and passengers, and payment through revenue earned through operations.

The NCLT has also instructed the RP to seek approval from the CoC until the next day of the hearing, slated for 7 August.

During the hearing, senior advocate Ramji Srinivasan, representing the RP, informed the court that the refund pertains to passengers who made advance bookings totalling ₹597.4 crore. In response, the court inquired whether the RP could mobilize such a substantial amount. The RP clarified that immediate refunds were not on the table, but instead, payments would be made gradually after resuming flight services based on cash flow and revenue.

The tribunal also questioned the RP about obtaining approval from the CoC, to which the RP responded that they had informed the CoC during the meeting’s minutes. However, the court reinstated that the petition lacks the CoC’s resolution, emphasizing the need for RP to secure approval from the CoC since they are the only entity authorized to release funds. As per the petition, Go First suspended commercial operations on 3 May, resulting in a total booking value of ₹597.54 crore. The bookings comprised 15,49,573 tickets, out of which 15,25,862 tickets worth ₹582.77 crore were booked through online travel agents. Only 23,711 tickets amounting to ₹14.77 crore were booked through the company’s direct website.

As part of the fresh relaunch plan, Go First now plans to secure higher interim financing of ₹600-700 crore from banks and resume operations with fewer flights than was planned. The banks had earlier agreed to provide an interim funding of ₹425 crore and the airline planned to restart operations with 27 aircraft, which has now been reduced to 10.

The restructuring of the relaunch plan was necessitated after the aviation regulator didn’t approve the plan in full due to shortage of pilots and other operational staff.