The interim resolution professional (IRP) to Go First’s insolvency has informed the National Company Law Tribunal (NCLT) that the airline has “disproportionate liabilities and substantial dues”.
The airline’s liabilities as on April 28, 2023, increased by almost ₹3,500 crore in just one year, documents reviewed by businessline showed. Its total exposure to operational and financial creditors is ₹11,463 crore.
‘Feared’ consequences
According to documents filed by Go First with the NCLT, which have not been made public, the IRP said the company also feared that lessors and other creditors would invoke bank guarantees (BG) and standby letter of credit (SBLC) along with taking back the aircraft; hence, the airline filed for insolvency.
In his written communication to the NCLT, the IRP said: “The company is not at default today with any financial creditors.” However, due to substantial grounding of its aircraft for a long time because of operational difficulties, “the company has accumulated disproportionate liabilities, including those towards lessors of the aircraft.”
He added that as it was evident from the company’s operational accounts, “There is a very high probability that due to the substantial overdues, lessors and other creditors who are guaranteed by SBLCs and BGs issued to them by the company, would invoke these. The company is anyway operating with reduced capacity and is not left with sufficient resources to pay its operating cost, overdue creditors and make good the potential devolvement of SBLCs and BGs.”
This letter was attached with the company’s insolvency petition to the NCLT.
According to the petition, as of April 28, 2023, the company’s non-current liabilities shot up to ₹14,018.69 crore from ₹11,724.53 crore in FY22 and ₹10,488.88 crore in FY21. Similarly, its current liabilities shot up from ₹6,330.41 crore in 2021 to ₹8,113.98 crore in FY22 and to ₹8,578.27 crore as of April 28.