Wednesday, February 23, 2022

Court rejects plea by India’s Go First in insolvency case

India’s government-appointed corporate law court, the National Company Law Appellate Tribunal (NCLAT), has dismissed an appeal Go First had filed against an earlier ruling at the court allowing for the withdrawal of insolvency proceedings against a Mumbai-based logistics and groundhandling firm, the Press Trust of India reported.

Go First, an operational creditor, filed its claim against Sovika Aviation Services on September 6, 2021. But that same month, the Mumbai bench of the tribunal allowed an application that an insolvency administrator had lodged to withdraw the Corporate Insolvency Resolution Process (CIRP) against it.

Under India’s Insolvency and Bankruptcy Code, the tribunal can reject an ongoing insolvency process against a company, subject to certain conditions, as long as it has the approval of a 90% voting share of the creditors’ committee.

A two-member NCLAT bench observed that in this case the creditors’ committee had already resolved to withdraw the CIRP against Sovika in March 2021.

“In view of the sequence of events and facts brought on record, [...] we do not find any error in the order of the NCLAT permitting the withdrawal of the CIRP,” the tribunal said in its dismissal of Go First’s appeal.

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