Go First is on the verge of a significant step as lenders prepare to vote on a proposal for liquidation. Two banking sources disclosed to Reuters that the lack of bidders following the bid deadline has prompted this crucial move.
With no apparent interest from potential suitors and the bid deadline passing without any takers, individual lenders are now weighing the option of liquidating Go First. The proposal is set to undergo a voting process within the next 10-15 days, as revealed by a banker from a state-run bank with exposure to Go First.
The Committee of Creditors met on Wednesday and Thursday this week to deliberate on the future course of action for Go First, reported Reuters. This crucial meeting follows the conclusion of the bid deadline and the apparent lack of interest from potential investors.
Legal Hurdles and Collateral Concerns Push Banks Towards Liquidation
Amid legal troubles, one of the bankers emphasized that liquidation seems to be the only viable option for banks. The reluctance of suitors, coupled with concerns over legal complexities and the presence of collateral backing the loan, has led bankers to lean towards liquidation over restarting the insolvency process.
Go First’s Financial Woes: Outstanding Debt
The airline filed for bankruptcy protection in May, and carries a substantial debt of 65.21 billion rupees ($785.6 million). Despite the acceptance of an expression of interest from Jindal Power, the sole suitor, the company eventually decided not to proceed with a bid, intensifying the airline’s financial challenges.
Go First also found itself entangled in a legal dispute with its lessors, compounded by a moratorium imposed by courts preventing the repossession of planes. Although recent amendments to India’s insolvency rules could favor lessors, the application of these changes to Go First is pending a court decision.