Lenders to India’s Go First remain hesitant to disburse additional funding to the grounded airline. This reluctance is attributed to the airline’s ongoing legal issues with lessors and the complexities surrounding recent changes in bankruptcy law, as conveyed by two banking sources to Reuters on Monday.
In June, Go First’s lenders, including the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank, had provisionally approved funding amounting to 4.50 billion rupees ($54.09 million) with the intention of resuming operations and reviving the airline.
However, the circumstances have since evolved, leading to a lack of optimism regarding the airline’s future.
One of the bankers explained, “When the funding was approved, there was some visibility about the airline restarting operations.” However, they noted, “Now the situation is quite different and the future is bleak.” The banker, affiliated with a state-run bank exposed to Go First, commented on the change in the situation.
Given the sensitivity of the matter, none of the sources were willing to disclose their identities, as they lacked authorization to speak to the media.
Go First’s Committee of Creditors (CoC)
According to the sources, the Committee of Creditors (CoC) of Go First convened earlier in the day. In May, Go First had filed for bankruptcy, but the lessors’ attempts to repossess aircraft were hampered by a moratorium imposed by Indian courts. However, last month, India introduced amendments to its insolvency law, which could potentially allow lessors to repossess their aircraft.
In a court filing, the country’s aviation regulator asserted that the law would apply retroactively, a stance that lenders are reportedly planning to challenge. Should Jindal Power Ltd fail to submit a bid, the bankers suggested that discussions regarding liquidation may ensue, referencing an expression of interest received from Jindal Power Ltd on October 12.
Both sources disclosed that the deadline for bid submissions is November 21, and lenders intend to seek a procedural 90-day extension to facilitate the resolution process for the airline.
