Go First Establishes a Company to Deal with Airplane Leasing Companies

By Consultants Review Team Thursday, 04 January 2024

First and foremost, there is a crisis: Go First, which has been targeted by contempt proceedings from aircraft lessors for failing to disclose plane documentation, has purportedly formed a firm to communicate with the leasing companies. The company was founded in December and is run by Sachin Naik, a former Go First finance executive.

According to the Economic Times, Go First's resolution professional stated in letters to aircraft lessors that the new firm was founded by 'some Go First' workers to collate aircraft records and paperwork. The resolution professional added in the letter that Go First might also assist lessors in engaging MROs (maintenance, repair, and overhaul corporations) through Naik to execute essential aircraft maintenance. 

According to a lawyer, representing one of the lessors, most lessors have agreed to the “tripartite arrangement”. The lawyer told the daily that under IBC norms, the resolution professional is responsible for the upkeep of the assets but since Go First has no money or staff, the lessors will bear the cost of maintenance.  Go First's resolution professional (RP) Shailendra Ajmera had earlier said the airline’s lessors were blocking it from reviving its operations by filing petitions seeking the deregistration of its aircraft.

On October 12, the Delhi High Court directed Go First's resolution professional to release critical aircraft papers within a week. DAE (SY22) 13 Ireland Designated Activity Company, a subsidiary of DAE Capital, filed a case with the court, alleging the airline of willfully defying the court's order. DAE and other lessors have stated that they were denied access to any documents. They were also concerned that the planes were in disrepair and remained unmaintained and unprotected during the rainy season.

The case becomes even more problematic because India's bankruptcy regulations prevent assets for a firm in insolvency proceedings from being deregistered. On May 10, last year, the NCLT accepted the airline into the corporate insolvency process. 

In November of last year, the airline informed the Delhi High Court that it had spent the cash allocated by the Committee of Creditors and was experiencing a labor crisis. The CoC granted the airline Rs 100 crore for service maintenance charges. 

Meanwhile, SpiceJet has expressed interest in acquiring Go First and intends to make an offer after conducting due diligence on the carrier. "Please note that SpiceJet Limited has expressed interest with the Resolution Professional of Go First and wish to submit an offer post diligence, to create a strong and viable airline in a possible combination with SpiceJet," SpiceJet stated in a filing with the stock exchanges.


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