Attorneys suggest that Go First may get another moratorium extension

Attorneys suggest that Go First may get another moratorium extension

Although the grounded airline will have more time to recover, this might cause a further delay in returning the aircraft to its lessors, who have filed lawsuits over this.

Go First is apparently getting ready to petition the NCLT to extend its ban for an extra sixty days as SpiceJet, Safric Investments, and Sharjah-based airline Sky One show interest.

New Delhi: After its first 90-day extension ends on February 4, legal experts predicted that Go First would be able to get a 60-day extension of the moratorium period to finish its bankruptcy resolution procedure.

This will allow the grounded airline more time to recover, but it may also cause a further delay in the aircraft's return to its lessors, who have filed several legal cases demanding it.

The airline has apparently drawn the attention of the airline located in Sharjah and is getting ready to petition the National Company Law Tribunal (NCLT) to prolong its moratorium term by an extra sixty days.SpiceJet, Safric Investments, and Sky One are all centered on Africa.

The NCLT will rule on the airline's conduct in November 2023.GoFirst, which was unable to provide a resuscitation plan, was granted a ninety-day extension until February 4th to complete the insolvency process. After this extension ended on Sunday, Go First had finished the whole 270-day procedure. He is allowed to request an extension of up to 330 days in accordance with the requirements.

In May 2023, Go First declared bankruptcy, attributing its financial difficulties on the Pratt & Whitney engine's failure. Since then, administrative issues like the NCLT's frequent bench changes and difficulties presented by lessees have prevented it from taking off once again. In November, there was the most recent hearing that was held.

According to Debarshi Dutta, partner at Solaris Legal, "the NCLT may permit an extension of up to 60 days if the resolution professional in this case requests one as long as it falls within the overall IBC-mandated 330-day limit."

Desai & Diwanji partner Anoj Menon expressed his hope that NCLT Delhi might extend this term to 330 days, citing the desire to present a resolution plan from one of India's top businessmen.

The extra sixty days will be the final chance that Go First's resolution specialist has to save the airline over the allotted 330 days. Moreover, liquidation could be the only practical choice. Legal experts do, however, propose that under some extraordinary circumstances, NCLT may extend beyond the 330-day period.

Yogendra Aldak, partner at Lakshmikumaran & Sreedharan, said, that although the normal CIRP period is 330 days, a manifestation may be granted in appropriate if exceptional circumstances, especially in situations where it is expected to reach finality shortly." He noted that the NCLT had granted it the power to exclude certain time periods—like moments when the court halted or annulled the process—from the calculation of the overall timeframe.

Debarshi Dutta emphasized that the NCLT considers the wider interests of all parties involved in order to save a business from going into liquidation when there is a good chance it may be saved. Dutta went on to provide instances, citing the Essar Steel case as one where the Supreme Court had given the case a more than 330-day extension.

The airline's aircraft and engine lessors, who have been requesting the prompt restoration of their grounded aircraft and engines in both the NCLT and the Delhi High Court, would greatly benefit from the prolongation of Go First's insolvency settlement.

Lessors should be entitled get their aircraft back in this scenario if the procedure fails, the moratorium expires, and Go First moves on with liquidation since the leased aircraft won't be included in the liquidation assets (under Section 36 of the IBC). Lessees would no longer be impacted by the moratorium order, which has been contested before the Delhi High Court, once it expires. Consequently, it may not be required to file a lawsuit before the Delhi High Court. The lessors would still be able to pursue their claims as Go First's operating creditors in the liquidation process even after they reclaim their aircraft, according to Anoj Menon.

However, lessors have a better case, according to Yogendra Aldak, because of the recent government announcement exempting deals involving planes from the ban. They may now get their aircraft back without having to wait for the end of the insolvency procedure or the moratorium period.

After 270 days of the insolvency resolution process, no resolution plan has been disclosed, hence there is still ambiguity over the future of Go First. Nevertheless, a number of prospective purchasers have shown interest. Ajay Singh, the founder of SpiceJet, Sky One, an airline located in Sharjah, and the obscure Busy Bee are the three companies that have reportedly made a formal expression of interest to purchase the bankrupt airline along with a ₹5 crore bank guarantee.

Prior to that, billionaire Naveen Jindal's company Jindal Power expressed interest in it. But the business apparently retracted their offer after assessing the airline's financial figures.