The National Company Law Tribunal (NCLT) has officially ordered the liquidation of Go First, the budget airline that has been grounded since May 2023 due to severe financial distress. This decision, made on January 20, 2025, comes after a prolonged struggle for the airline to navigate its insolvency proceedings and find a viable path to recovery.
Background of Go First’s Financial Troubles:
On May 2, 2023, Go First, which is controlled by the Wadia Group, first declared voluntary insolvency in accordance with Section 10 of the Insolvency and Bankruptcy Code (IBC). Shortly after, the NCLT accepted this plea and designated a Resolution Professional (RP) to supervise the airline’s activities. However, Go First had to deal with growing debts that eventually totaled almost ₹11,000 crore in spite of attempts to stabilize the airline, including talks with lessors and creditors.
The airline’s operational difficulties were made worse when leasing companies seized its aircraft. According to estimates, 28 of Go First’s initial fleet of 54 aircraft had been repossessed by December 2024. The Committee of Creditors (CoC) determined that liquidation was the only practical alternative because the absence of operating aircraft significantly reduced any chance of rebirth.
NCLT’s Liquidation Order:
An application submitted by the CoC in September 2024 served as the basis for the NCLT’s decision to liquidate Go First. Under the direction of Technical Member Dr. Sanjeev Ranjan and Judicial Member Mahendra Khandelwal, the panel said, “Liquidation is ordered.” This decision essentially ends Go First’s existence as an airline and emphasizes the difficulties that many low-cost airlines confront in a market for aviation that is becoming more and more competitive.
Following a number of court cases involving Go First’s lessors, the NCLT issued its order. After challenging the asset recovery moratorium imposed during the insolvency proceedings, these lessors were finally directed by the National Company Law Appellate Tribunal (NCLAT) to ask the NCLT for clarity on their claims.
Implications for Stakeholders:
Many parties will be significantly impacted by Go First’s liquidation. The airline has significant debts to a number of lenders, including big institutions like Bank of Baroda and Central Bank of India. Creditors are left to risk losses since there are no longer any operational assets available to make money or fund a restructuring plan.
Customers who used Go First to book flights are also currently in a limbo when it comes to reimbursements and compensation for services that were canceled. Approximately ₹2,000 crore and ₹1,000 crore are among the airline’s unpaid debts to aircraft lessors and vendors, respectively. How these debts are resolved and what options may be available to impacted customers will be decided by the liquidation process.
The Future of Indian Aviation:
Other airlines who operate in India’s low-cost market should take note of Go First’s liquidation. It emphasizes how crucial sound financial management and effective operations are in a market with intense rivalry and fluctuating demand. Similar low-cost carriers’ viability and resilience to economic challenges are called into doubt by Go First’s exit from the market.
In order to overcome regulatory obstacles and maintain financial stability, stakeholders in India’s aviation industry will need to modify their approaches going forward. In light of global trends impacting airlines in the face of economic uncertainty, the NCLT’s ruling represents a turning point in Indian aviation history.
