Go First Moves Toward Liquidation as Bids Fail to Meet Expectations
Go First airline is poised for liquidation after bids from prospective buyers fell short of creditor expectations. The focus now shifts to arbitration claims and land sales for potential recovery.
Photo Source: Aviation A2Z
The beleaguered Go First airline is moving toward liquidation as discussions between banks and prospective bidders have yielded unsatisfactory results. Five months after receiving formal bids for the Wadia Group-owned carrier, creditors are finalizing a proposal to liquidate the airline due to disappointing bid offers.
The two bids under review — one from a consortium led by EaseMyTrip CEO Nishant Pitti and SpiceJet chairman Ajay Singh, and the other from Sharjah-based Sky One Aviation — fell short of expectations. Creditors are expected to vote on the liquidation proposal this week, following the completion of necessary steps such as selecting a proposed liquidator and calculating liquidation costs.
The insolvency process is set to conclude by August 3, by which time a final decision will be made. Negotiations with the bidders failed to produce a viable offer, and both bids were contingent on the outcome of ongoing arbitration claims in Singapore. Lenders are skeptical about selling the airline at a low price and prefer to focus on the potential recovery from arbitration proceedings.
The arbitration case involves Go First’s claims against US-based engine maker Pratt & Whitney for over $1 billion, alleging that faulty engines were not replaced in time, leading to the grounding of half of the airline’s fleet. Creditors anticipate a better recovery from this arbitration than from selling the airline itself
Sky One Aviation offered Rs 735 crore in cash upfront and up to 20% of future arbitration claims, while Ajay Singh proposed Rs 650 crore over 12 months and 10% of arbitration claims. Creditors are also expecting a minimum of Rs 1,965 crore from the sale of a 94-acre land parcel in Thane, Mumbai, which is held as collateral.
With Go First’s total debt amounting to Rs 6,200 crore, creditors, including Central Bank of India, Bank of Baroda, and IDBI Bank, believe that pursuing arbitration claims and land auction are more promising avenues for recovery than liquidating the airline at a low price.
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