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The banks plan to conduct a forensic audit of the accounts of cash-strapped Go First Airlines, which has filed for bankruptcy protection, to assess whether there was any transfer of funds.
The airline, promoted by Woodias, voluntarily filed bankruptcy settlement proceedings with the Delhi National Company Law Tribunal (NCLT) on May 2, which was accepted by the court on May 10.
On June 15, the NCLT granted approval to the Creditors Committee (CoC) to appoint Shailendra Ajmera of EY as the Resolution Professional (RP) for the debt-ridden airline. Earlier, NCLT appointed Marsal-backed Alvarez and Abhilash Lal as Interim Resolution Professional (IRP) on the recommendation of the airline.
The total debt of the airline to lenders including Bank of Baroda, Central Bank of India, IDBI Bank and Deutsche Bank was Rs 6,521 crore on 28th April 2023. Banks had their fingers burned when Kingfisher Air and Jet Airways collapsed dramatically. religion.
“Now that the resolution professional is hired, he or she will do an audit of the transactions (for Go First accounts), which is mandatory. Once the audit of the transactions is done, lenders can do a forensic review of the airline book. Lenders will likely get a call about this within a week.”
Go First did not respond to an email sent to it seeking comment.
The purpose of commissioning transactional and forensic audits of accounts of a company or individual is to ascertain the end use of loans granted to them. These audits help lenders detect fraud, misreporting, and money transfers by borrowers if any.
Lenders will likely classify the airline as a non-performing asset (NPA) in the next quarter of this fiscal year, said a person familiar with the matter.
Sources said the newly appointed decision expert is likely to present a new airline revival plan soon to the aviation-regulated Directorate General of Civil Aviation (DGCA), along with that to the Code of Conduct. The RP will assess the financing requirements for the airline. A person close to the development said it would submit a request to the coordinating committee, which would then decide on interim funding, depending on the viability of the revitalization plan.
Earlier, Lal submitted a revival plan to the Directorate General of Civil Aviation, according to which the grounded airline proposed to resume operations with 26 aircraft and 152 daily flights, according to the PTI report. As part of the plan, the airline has also sought Rs 400 crore financing from lenders to resume operations.
Last month, the RBI, which is the leader of the consortium, said its outstanding exposure to Go First Airline as on March 31, 2023 was Rs 1,987 crore, including Rs 682 crore sanctioned under the Contingency Guaranteed Line of Credit (ECLGS) scheme of before the government.
Bank of Baroda’s exposure to the airline is close to Rs 1,300 crore. The bank has also provided financing to the airline under the scheme while the loan owed to IDBI Bank is around Rs.50 crore.
The airline has an undrawn line of credit under ECLGS that it wants to use as part of the temporary financing. However, banks are unlikely to release any funds under the scheme because the National Credit Guarantee Corporation (NCGTC) may not offer any credit guarantee, the sources said.
Under ECLGS, NCGTC provides 100 percent guarantee coverage to banks and non-bank financial companies on credit extended to commercial enterprises or MSMEs.
Aviation industry experts believe the next 10 days will be crucial for reviving Go First, which suspended operations on May 3. Last Thursday, the airline said it had extended flight cancellations until June 19 for operational reasons. “It will be difficult to revive the airline unless a concrete revival plan is put in place in the next seven to 10 days,” said an aviation sector analyst.
The COC’s first meeting following the airline’s admission to bankruptcy court took place on June 9. And in the meeting, COC suggested replacing Lal with Ajmera as RP. The NCLT gave its approval for Ajmera’s appointment to the COC on 15 June.
Sources said the ITC has also appointed J Sagar Associates as its legal advisor in place of Treligal.
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