DGCA Orders Go First To Get CoC's Approval On Revival Plan

The Directorate General of Civil Aviation (DGCA) has requested Go First to prepare a resumption plan for its services, subject to approval from the committee of creditors (CoC), according to a report by a leading media house. The DGCA clarified that the plan must receive approval from the CoC before it can be considered. 

The CoC is scheduled to convene on Friday for their first meeting. Major lenders to the distressed airline include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. According to Go First's submission to the National Company Law Tribunal (NCLT), the airline has outstanding debts of Rs 6,521 crore to its creditors. Additionally, the report indicates that the carrier has pending payments to its vendors, resulting in a total amount due of Rs 11,463 crore. 

Previously, the interim resolution professional (IRP) had presented a six-month revival plan to the DGCA. The plan outlined the possibility of Go First resuming operations using its existing fleet of 26 aircraft and employing 400 pilots, as stated in the report. 

In Go First’s Case...

When a company fails to fulfill its financial obligations towards its creditors, banks take the matter to the NCLT and file an insolvency plea against the company. Subsequently, the IRP initiates a process to solicit bids for the establishment of a resolution plan. These bids are then presented to the CoC for evaluation and approval. The CoC carefully assesses the bids and votes to approve the plan that offers them the most advantageous terms. 

However, the situation with Go First is different. It was Go First itself, not the creditors, that approached the NCLT to voluntarily file for insolvency. This cannot be categorised as a default since Go First had not defaulted on its payments to financial creditors up to that point. Consequently, the airline has the right to devise its own resolution plan. Nonetheless, regardless of the circumstances, the plan must receive approval from the CoC. 

Legal experts who are monitoring the situation have informed that as there is no prior instance of a company filing for voluntary insolvency, the DGCA wants the resolution plan to be endorsed by the CoC before making any decisions.