I. AIR LAW
NCLT GRANTS 60-DAY EXTENSION FOR GO FIRST'S INSOLVENCY DEADLINE
The National Company Law Tribunal ("NCLT"), granted a 60-day extension on February 13, 2024 for the resolution process of the grounded airline Go First. Thisextension was followed based on the admission of a plea by the Resolution Professional of Go First, requesting additional time to complete the corporateinsolvency resolution process ("CIRP") [NCLT order IA/592/2024].
The NCLT previously granted a 90-day extension, ending on February 4, 2024 forthe completion of the airline's insolvency resolution process under the Insolvency & Bankruptcy Code ("IBC"). The IBC mandates that the CIRP must be finalized within 330 days, including litigation periods, or the corporate debtor faces liquidation. Go First voluntarily initiated insolvency proceedings on May 10, 2023 ceasing operations on May 3, 2023. However, they opted to restart the resolution process to allow previous interested parties a chance to submit concrete bids. Additionally, Go First reportedly established a subsidiary to address concernsraised by aircraft lessors regarding non-disclosure of plane documents, aiming to collate aircraft records and documents.
The NCLT approved an additional 60-day extension for the resolution process of Go First, not withstanding the expiration of the standard 330-day deadline. The extension was granted under exceptional circumstances, following a plea filed by the resolution professional and unanimously approved by the Committee of Creditors, comprising Central Bank of India, Bank of Baroda, and IDBI Bank Ltd.This extension, authorized by the NCLT considering the Supreme Court's ruling inthe Essar Steel case [Committee of Creditors of Essar Steel India Limited (throughauthorized signatory) v. Satish Kumar Gupta and Others, (2020) 8 SCC 531], allows for flexibility beyond the mandated time frame for insolvency and bankruptcy resolutions. Despite the extension, it is improbable that further extensions will be granted by the NCLT. The tribunal directed the resolution professional to conclude the process within the extended period, as two resolutionplans are in the finalization stage. As per the last order of the NCLT regarding this matter, which was passed on April 05, 2024, the Tribunal sought directions to the Resolution Professional and issued notice to the Resolution Professional to file reply.
Originally published by 08 May, 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.