Wadia Group’s GoFirst airline is reportedly seeking to raise funds to resume its operations as soon as possible. The company has started talks with banks and other institutions to borrow INR 225 crore. One of the banks lending to the airline said that GoFirst has sought the loan to restart its services. The company is looking for a new loan of INR 225 crore. An insolvent company can borrow money through an Interim Resolution Professional (IRP) to continue its operations.
Banks could lend under NCLT’s framework
Banks have said that since the insolvency process has already begun under the Corporate Insolvency Resolution Process (CIRP) in the National Company Law Tribunal (NCLT), they are considering GoFirst’s request for a loan. However, a bank said that they would only try to lend under the framework of NCLT. Earlier, banks had said that they would not lend to GoFirst until the resolution process was completed.
GoFirst files for bankruptcy under Section 10
According to a senior executive, banks changed their stance after GoFirst began efforts to restart its services by paying salaries to employees and repaying loans to oil marketing companies and airports. GoFirst has filed for bankruptcy under Section 10 instead of Sections 7 and 9. Section 10 allows a company to initiate the insolvency process for itself. Banks file an application under Sections 7 and 9, which complain against the company taking the loan.
Banks lend INR 6,521 crore to GoFirst
According to GoFirst, Bank of Baroda, Central Bank of India, Deutsche Bank, and IDBI Bank have given loans of INR 6,521 crore to the airline. Central Bank has given the most significant loan of INR 1,987 crore. Bank of Baroda has given a loan of INR 1,430 crore, while Deutsche Bank has given a loan of INR 1,320 crore. IDBI Bank has given a loan of INR 58 crore. This information was given by Acuite Ratings and Research on January 19.
GoFirst filed for insolvency on May 10, and NCLT has accepted the airline’s plea. It has granted it bankruptcy protection and has not allowed lessors to take back their aircraft. GoFirst has held Pratt & Whitney responsible for its difficulties in its plea. It has said that the company has refused to accept the decision of the Singapore International Arbitration Centre (SIAC). SIAC had ruled in favor of the airline.
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