Go First's Fate Hangs in Balance as Liquidation Option Nears

Will Go First Survive? Liquidation Option on the Table

Go First is facing imminent liquidation, as reported by the Economic Times. The airline ceased operations in May 2023 and filed for administration shortly afterwards. Two bids for what remained of the airline fell below the lenders' expectations, and negotiations with the bidders have not resulted in any changes.

The lenders are finalizing the details of the liquidation, including selecting the liquidator, determining the costs, and organizing funding, before putting the proposal to a vote in an upcoming Committee of Creditors (COC) meeting. Four banks—Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank—are among the largest creditors in the COC.

The creditors had preferred to sell the airline rather than liquidate. Still, a court ruling in April ordered the deregistration of Go First's aircraft and their return to lessors, diminishing the airline's value. Subsequently, the mood changed, and the lenders now believe they would get a better return from pursuing a USD 1 billion lawsuit against Pratt & Whitney, whose engine issues contributed to Go First's downfall.

Two bids were submitted for the airline, one from Sharjah-based Sky One and the other from EaseMyTrip founder Nishant Pitti and SpiceJet CEO Ajay Singh. However, both bids were below the lenders' expectations and dependent on ongoing arbitration claims in Singapore, which the lenders themselves are pursuing.

In addition to the lawsuit, the COC intends to sell a 94-acre parcel of land near Mumbai, expected to yield almost INR20 billion. The lenders argue that pursuing the lawsuit and selling the land will result in a more profitable outcome than selling Go First at a significant discount.

The COC meeting, where the decision on Go First's future will be made, is expected within the week. As the courts have warned, the official Corporate Insolvency Resolution Process ends on August 3, and no further extensions will exist.