Go First resolution process extended to Feb 2024 amid bid withdrawal

National Company Law Tribunal granted approval for an extension of 90 days, until February 4, 2024, to the resolution process of the financially distressed airline Go First. This decision followed an October 17 resolution by the Committee of Creditors to prolong the resolution process, which originally concluded after six months on November 6. The extension received consent from lenders earlier this month. The need for this extension was attributed to the prevailing circumstances, particularly the necessity to provide adequate time for due diligence to the sole bidder, Naveen Jindal. Jindal had been declared a legitimate bidder on October 22, and the extension aims to accommodate a one-month due diligence period. In a recent development, Jindal Power opted to withdraw its bid for Go First, marking the only preliminary inquiry that qualified as a bidder for the airline. Two other potential bidders reportedly failed to meet the financial criteria set by lenders in November. Amidst legal battles initiated by various aircraft lessors to reclaim planes leased to Go First, the government, in October, exempted aircraft objects registered in the international registry from the moratorium stipulated by the Insolvency and Bankruptcy Code (IBC). According to Reuters, lenders such as Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank, are reluctant to provide additional funding to Go First due to its legal challenges with lessors and the complexities arising from changes in bankruptcy laws. The Directorate General of Civil Aviation (DGCA) announced earlier this month that the retrospective application of the amendment in the insolvency law, exempting aircraft objects from the moratorium, will be enforced. This becomes crucial as aircraft represent the fundamental assets of an airline, and the repossession of planes by lessors could significantly diminish the valuation of Go First as a viable entity.