Friday, May 12, 2023

Lenders in no mood to pump fresh funds into Go First till resolution

Banks are not looking at lending to the cash-strapped Go First before the completion of the resolution process of the airline, a senior executive of one of the lenders has said, refusing to be identified.

“As of now, we are looking at a resolution. We are not looking at any further lending,” said the executive.

This comes after the airline said it was looking for a one-time settlement with its lenders.

The National Company Law Tribunal (NCLT) on May 10 accepted the airline’s voluntary application for insolvency proceedings.

In line with the initiation of the process in NCLT, the senior executive said that there are positive chances for the airline to revive but “we are waiting for the resolution process”.

“The moratorium is there and the planes are not going out but there's a good chance of the airline getting back and maybe in some months back to normal. Let’s see how the resolution comes out and who the interested players are,” said the executive.

Go First’s insolvency and bankruptcy petition was filed under Section 10, instead of Sections 7 and 9. While Section 10 allows a debtor to initiate insolvency proceedings against itself, Sections 7 and 9 allow creditors to take the debtor to the NCLT to recover dues.

Go First owes lenders, including Bank of Baroda, Central Bank of India, Deutsche Bank and IDBI Bank Rs 6,521 crore, according to the airline’s filing.

Central Bank of India had the highest exposure of Rs 1,987 crore, followed by Bank of Baroda at Rs 1,430 crore, Deutsche Bank at Rs 1,320 crore and IDBI Bank at Rs 58 crore, Acuite Ratings and Research said in a January 19 report.

Moneycontrol earlier reported that lenders to the airlines, which are owed over Rs 6,000 crore, have adopted a wait-and-watch approach before deciding to provide the airline with additional funds.

12/5/2023 Jinit Parmar/Moneycontrol

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