NCLT Orders Liquidation of Go Airlines (India) Limited [Read Order]

The New Delhi Bench of the National Company Law Tribunal (NCLT) has ordered the liquidation of Go First Airlines, marking the conclusion of a 20-month-long insolvency process after no viable resolution plan emerged. The tribunal upheld the decision by the Committee of Creditors to liquidate Go Airlines, which approved the liquidation with a 100% vote.

The NCLT filed a Corporate Insolvency Resolution Process under section 10 of the Code against M/s Go Airlines (India) Limited (Applicant/Corporate Debtor) on May 10, 2023. Mr. Shailendra Ajmera (Respondent) was designated as the Resolution Professional (RP) by the Committee of Creditors (CoC).

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In accordance with Regulation 6 of the IBBI (Resolution Process for Corporate Persons) Regulations, 2016, the IRP publicly announced on May 13, 2023, that interested parties were welcome to lodge claims against the Corporate Debtor. The CoC did not find the Resolution Plans to be commercially viable or in compliance with the Code. Consequently, on July 23, 2024, the CoC decided to liquidate the corporate debtor.

The applicant had applied to the Adjudicating Authority to have Mr. Dinkar T. Venkatasubramanian take over as the corporate debtor's liquidator in compliance with the IBBI circular from July 18, 2023, which suggested that an insolvency professional be appointed as the liquidator instead of a corporate debtor's resolution professional.

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The anticipated liquidation cost of Rs. 21.6 crores was disclosed at the CoC meeting on July 23, 2024, and it was decided that CoC members would pay for it in accordance with their voting shares. In order to cover the expected liquidation expenses under Regulation 39B of the CIRP Regulations, the CoC obtained litigation finance from Burford Capital in accordance with the terms of the Capital Provisions Agreement (CPA) for the SIAC arbitration.

The application to liquidate the corporate debtor in accordance with section 33(2) of the Code and appoint Mr. Dinkar T. Venkatasubramanian as the liquidator was preferred by the applicant.According to Section 33(2) of the Code, if the CoC approves the resolution for liquidation with more than 66% of the votes, the Adjudicating Authority will issue an order for the corporate debtor's liquidation. The Tribunal observed that liquidation was 100% accepted by the CoC.

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The Tribunal emphasized that the CoC has the authority to decide to liquidate the Corporate Debtor at any point following its formation and prior to the resolution plan's approval. In accordance with business acumen, it declined to impede the CoC's decision.

The CoC in the legislative scheme has the authority to decide to liquidate the corporate debtor at any point after its constitution and prior to the resolution plan's confirmation, as per the Tribunal, which is composed of Justice Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member).It was observed that the Adjudicating Authority should not tamper with the CoC's choice to liquidate in accordance with its business acumen.

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By directing the liquidation of the corporate debtor, M/s Go Airlines (India) Limited, and placing Mr. Dinkar Tiruvannadapuram Venkatasubramanian as the liquidator in accordance with section 32(1) of the Code, imposing a new moratorium under section 33(5) of the Code, and directing payment of compensation and expenses to the applicant, among other things, the Tribunal granted the application.

To Read the full text of the Order CLICK HERE

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