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This is an archive article published on May 11, 2023
Lenders may mark Go First as NPA this qtr
Two more lessors move NCLAT against airline’s insolvency proceedings.
The Go First bankruptcy filing lists Central Bank of India Ltd, Bank of Baroda Ltd, IDBI Bank Ltd and Deutsche Bank among its financial creditors, which are owed 65.21 billion rupees ($797.38 million) in total. (File Photo)
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Lenders may mark Go First as NPA this qtr
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Lenders to Go Airlines (India) Ltd, which is undergoing bankruptcy proceedings, will likely classify the airline’s account as a non-performing asset (NPA) in the current quarter, according to a source.
Meanwhile, two more Go First lessors — GY Aviation and SFV Aircraft Holding — Thursday moved the National Company Law Appellate Tribunal (NCLAT) against Wednesday’s order passed by the National Company Law Tribunal (NCLT) allowing initiation of the airline’s voluntary insolvency plea.
SMBC Aviation Capital, which is one of the world’s largest aircraft leasing companies, had moved NCLAT on Wednesday, hours after the Delhi-based Principal bench of the NCLT admitted Go First’s insolvency plea. The NCLT granted protection to the airline from recovery from banks and lessors.
It also appointed Abhilash Lal from Alvarez & Marsal as the interim resolution professional (IRP) for the airline.
“If the insolvency process has been initiated, it is obvious that there is weakness in the case. It (Go First) will be downgraded (to NPA),” a source said.
“NPA (classification) is not only by virtue of default, it could be because of inherent weakness in credit or incipient sickness of the company,” the person said.
The source said the account, which was standard in the lenders’ books till April 30, 2023, will be classified as NPA in the first quarter of this fiscal.
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The lenders to the airline include Central Bank of India, Bank of Baroda and IDBI Bank. In an exchange filing on May 3, private lender Axis Bank said ‘it has Nil (fund based and non-fund based) outstanding from Go Airlines’.
On May 3, Central Bank of India said its outstanding exposure to Go First Airlines as on March 31, 2023 was Rs 1305 crore and an additional amount of Rs 682 crore sanctioned under emergency line of credit guaranteed by the government.
“Our exposure to the Company is only 0.91 per cent of our total advances as of March 31, 2023 and interest charged upto April 30, 2023 is serviced by the Company,” the bank informed exchanges.
“We wish to highlight that in the recently published Financial Results for FY 2022-23, Bank has made contingency provisions of more than Rs 1500 crore in the books to strengthen the Balance Sheet,” the lender said.
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The airline has told the NCLT that it owes Rs 6,521 crore to financial creditors, a Reuters report said. According to Reuters, Lal, the interim resolution professional, on Thursday informed the Go First staff that the airline will need to raise funds to keep it as a going concern.
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