GoFirst IBC case: Lenders may go ahead with resolution process with sole bidder Jindal Power

Industrialist Naveen Jindal-promoted Jindal Power Limited happens to be the only suitor for GoFirst at the moment, and the beleaguered airline’s lenders may be planning to go ahead with the resolution process with the sole suitor, sources told CNBC-TV18 on October 12.

GoFirst received three Expressions of Interest (EOIs) from prospective bidders for the cash-strapped airline’s resolution under the Insolvency and Bankruptcy Code, 2016 (IBC). The other two suitors were lessor-known foreign entities, that are neither strategic players nor financial suitors and did not make the cut, CNBC-TV18 has learnt.

“We received three EOIs (expressions of interest) for GoFirst, but two were some lesser-known companies that did not qualify. So, we have only one suitor (Jindal Power Limited),” said one of the people involved in the matter.

Jindal Power has declined to comment on the development. Jindal Power Limited is a privately held company. It was divested to WorldOne by Jindal Steel and Power Limited (JSPL), a listed entity in 2021. WorldOne is a company owned by Naveen Jindal and his family. It remains unclear what ambitions or interests Naveen Jindal has in the aviation sector.

Jindal owns an aviation company by the name of India Fly Safe Aviation Limited that rents out plans and helicopters, but other than that has no presence in commercial aviation.

With only one suitor in the fray, lenders are yet to take a call on whether they will go ahead with the resolution process. One person in the know indicated that the lenders may invite a monetary bid from Jindal Power Limited and then take a call.

The EOI deadline, originally set for August 9, was extended twice to September 8 and eventually to September 28, amid poor response from bidders. One potential factor contributing to the hesitancy of PRAs in bidding for the airline is the ongoing legal battle between GoFirst and several of its foreign lessors.

In the latest update, sources say a final list of prospective resolution applicants will be released in the coming weeks, in this case, a singular one, after running checks and a Request for Resolution Plan (RFRP) will also be issued. IBC allows 30 days’ time for suitors to submit bids from the date of issue of RFRP.

Also, as per Section 12(1) of the IBC, the Corporate Insolvency Resolution Process (CIRP) needs to be completed within a period of 180 days from the date of initiation and for Go First, the deadline is set to end on November 6. The lenders are yet to take a call on seeking an extension.

The GoFirst bankruptcy filing lists Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank among its creditors to whom the carrier owes a total of ₹6,521 crore. GoFirst carries total liabilities of Rs 11,463 crore.

Separately, the government amended its insolvency law earlier this month to exclude leased aircraft from assets that can be frozen, to bring India's bankruptcy laws into line with a treaty protecting the rights of foreign lessors. However, the notification will not impact the Go First case as it cannot be applied retrospectively.

The fate of GoFirst remains uncertain as lenders, PRAs, and legal battles continue to shape the cash-strapped airline's future.

Go First flights are suspended until October 15, 2023, due to operational reasons.

Meanwhile, the Delhi High Court is currently hearing GoFirst’s lessors’ plea for deregistration planes, after a recent government rule said that an insolvency moratorium would not apply to leased planes. This is a potential factor contributing to the hesitancy of suitors with the ongoing legal battle between GoFirst and several of its foreign lessors leaving much room for uncertainty. Since falling under the purview of the Insolvency and Bankruptcy Code (IBC), GoFirst has been entangled in disputes with these lessors.