Go First Lands In NCLT With ₹11,463-cr. Dues
Context:
On Wednesday, Go First filed an insolvency petition with the National Company Law Tribunal (NCLT). According to the airline’s insolvency filing, it owes creditors Rs 11,463 crore.
National Company Law Tribunal
- The National Company Law Tribunal (NCLT) is a quasi-judicial organization that regulates Indian-registered companies and succeeded the Company Law Board in 2016. The Central Government formed the NCLT under Section 408 of the Companies Act, 2013.
- The National Company Law Tribunal (NCLT) serves as a central authority for corporate matters, bringing together the jurisdiction previously held by several bodies like the Company Law Board, the Board for Industrial and Financial Reconstruction (BIFR), and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). Additionally, the NCLT is responsible for handling powers related to the restructuring or winding up of companies, as well as certain provisions previously held by High Courts.
- The NCLT is a court with specific jurisdiction over corporations, hence its members are corporations. As a result, there are fewer lawsuits filed in various forums and courts.
- The NCLT can deliver justice up close because it has several branches. As a result, it takes less time to dissolve a firm, and cases that are resolved quickly result in fewer instances overall.
- The NCLT consists of both judicial and technical members while deciding on matters. This makes sure that while reaching a decision, both the legal and technical sides of a matter are taken into account.
- The powers of the NCLT are wide-ranging and include seeking the assistance of the Chief Metropolitan Magistrate, de-registration of companies, declaring the liability of members unlimited, de-registering companies in certain circumstances when there is registration of companies is obtained illegally or wrongfully, and remedies for oppression and mismanagement.
- The NCLT also has the authority to hear complaints regarding companies’ refusals to transfer securities and the correction of the members’ register, to safeguard the interests of various stakeholders, particularly non-promoter shareholders and depositors, and to offer investors relief from a broad range of wrongdoings carried out by the company management or other consultants and advisors connected to the company.
- Depositors who are displeased with the company’s conduct or inactions that impair their depositor rights may seek remedies through class lawsuits.
- The NCLT also has the authority to launch or conduct investigations anywhere in the world, as well as to freeze assets and place limitations on the company’s stock.
Points to Ponder:
- Go First Airlines has filed a petition for admission of its insolvency with the National Company Law Tribunal (NCLT) in Delhi.
- In its insolvency application, the airline claimed that it owed debts to vendors, banks, financial institutions, and aircraft lessors totalling 11,463 crores.
- The airline has also stated that it faces a severe financial crisis because its assets cannot cover its responsibilities.
- The airline decided to file for insolvency before the NCLT on Tuesday, at which point it cancelled all flights for three days.
- The airline has also acknowledged that it is in a dire financial situation because its assets are insufficient to meet its obligations.
- On Tuesday, the airline decided to declare bankruptcy before the NCLT, at which point it halted all operations for three days.
- The airline blamed the grounding of 25 aircraft on delays in Pratt & Whitney’s delivery of engines, which prevented it from meeting its financial obligations.
- Pratt & Whitney has refuted these allegations, claiming that it is in compliance with the arbitration decision from March 2023 and that the Singapore International Arbitration Centre had mandated that the business provide 10 engines to Go First by April 27 and another 10 by December.
- The NCLT has scheduled a hearing for this case for this Thursday, at which point the tribunal will decide whether or not to accept the airline’s bankruptcy claim.
- A resolution specialist will be appointed to assume control of the airline’s administration and make efforts to restore it if the NCLT accepts the airline’s insolvency appeal.
- The airline may risk liquidation if the resolution specialist is unable to save it, in which case its assets will be liquidated to recoup its debt.
