Mumbai Lenders to budget carrier Go Airlines (India) Ltd on Thursday deferred a consortium meeting as they await an order from the insolvency tribunal on the airline’s application for bankruptcy, a banker aware of the development said.
“We canceled today’s meeting as we decided to wait for the order on the matter. It will now happen either on Saturday or Monday,” said the banker quoted above.
He said the lenders would not be able to discuss their strategy on the matter until a final order comes from the tribunal. On Thursday, the tribunal had reserved its order.
Bankers are in a spot as a company which is making timely payments will not come under a moratorium once it is accepted by the National Company Law Tribunal (NCLT).
According to a January 19 report by Acuite Ratings and Research Ltd, lenders to Go Airlines include Central Bank of India, Bank of Baroda, Axis Bank, IDBI Bank and Deutsche Bank. However, Axis Bank has clarified in a regulatory filing that it does not have any exposure to the airline. According to Acuite Ratings report, the company owes to banks 5,600 crore, which includes debt and non-fund instruments such as letters of credit.
On Tuesday, the airline announced its decision to approach the bankruptcy tribunal, citing “an ever-increasing number of failed engines supplied by Pratt & Whitney’s International Aero Engines, LLC.” It said, as a result the airline had to ground 25 aircraft. By May 1st.
Legal experts said the voluntary insolvency resolution can be withdrawn before the formation of the Committee of Creditors (CoC), which may take three to four weeks after the application is accepted by the NCLT.
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