Questions over Go filing as CEO says owners committed
On Wednesday, a day after the low-fare airline moved the National Company Law Tribunal (NCLT), its CEO Kaushik Khona told a television channel that the promoters remain committed to the airline.
PremiumNEW DELHI/MUMBAI : As surprising as the Go First insolvency filing was its chief executive’s comment that the promoters remain committed to the airline. The twist has prompted questions about whether the airline intends to withdraw the filing and if so, how.
On Wednesday, a day after the low-fare airline moved the National Company Law Tribunal (NCLT), its CEO Kaushik Khona told a television channel that the promoters remain committed to the airline.
“We have not filed for bankruptcy. We are filing for a resolution process...by making an application under Section 10... we have moved to NCLT to find out if we can protect our assets and resume operations under the act. The purpose of the application is for resolution," Khona told a television channel.
While Khona’s statements may bewilder many, it is worth mentioning that he was ‘registered as Insolvency Professional with IBBI (Insolvency & Bankruptcy Board of India)’ between December 2018 and August 2020, according to his Linkedin profile.
“Promoters are still committed... we are ready to restart operations as soon as we have a moratorium available," he added.
This raises a key question on whether a company, which has filed for bankruptcy, can withdraw its application. Legal experts Mint spoke with said the proposal can be withdrawn before the Committee of Creditors (CoC) is constituted, which may take three to four weeks after NCLT accepts the application.
“Withdrawal of insolvency filing can be done at any time prior to admission with permission of NCLT. Once admitted, withdrawal is under Section 12A of IBC, read with Regulation 30A of CIRP regulations pre- and post-CoC constitution. Post-CoC Constitution, it will require approval by 90% of CoC," said Piyush Mishra, a partner at Luthra & Luthra Partners.
While a voluntary insolvency application can be withdrawn by the company before admission, it gets a bit tricky after the tribunal admits it. There are two scenarios applicable to withdrawal after admission, involving Section 12A of the insolvency code.
“Since this is a voluntary insolvency application, Go Air can withdraw it any time before admission. However, once admitted and the committee of creditors (CoC) is formed, withdrawal is only possible under Section 12A of the Insolvency and Bankruptcy Code, which requires 90% of the CoC members by vote share approving it," said Anindya Mazumdar, a partner at law firm Singhania & Co.
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