Go First's sorry tale of submissions to NCLT: All financial resources exhausted, 7,000 jobs at risk, Rs 208 crore to pay staff

Go First has already cancelled 4,118 flights in the last 30 days and will be constrained to cancel further flights in line with the capacity remaining with the company, the beleaguered airline's plea in the National Company Law Tribunal (NCLT) said. Business Today TV has seen a copy of the petition.

The petition further adds that if the company losses possession of the aircraft and the legal right to operate them, then continuance of its business as a going concern will be at stake, which will directly impact the employability of 7000 direct and 10,000 indirect employees, along with the debt repayment to creditors, such as to public sector banks and financial institutions which have significant debt exposure in the company. 

The promoters have committed almost Rs 6,400 crore to the company, or Rs 3,000 crore approximately by way of security provided to public sector unit (PSU) banks, and Rs 3,398 crore approximately split into equity infusion (Rs 1,593 crore) or promoter arranged unsecured debt (Rs 1,805 crore). 

However, the airline has not drawn a balance of Rs 208.25 crore, which can be drawn by the Interim Resolution Professional and can be used for the payment of salaries to the employees, the plea stated.

Rs 11,463 crore is owed by Go First to its creditors, which include dues towards, banks, financial institutions, vendors and aircraft lessors. Currently, the assets of the company are not sufficient to meet its liabilities. 

Due to such financial stress the essential goods and service providers (including fuel suppliers) are not ready and are not willing to offer their services and it is becoming increasingly difficult to run the business of the company as a going concern, the petition says.

It has now exhausted all financial resources, including full utilisation of: (a) facilities availed from bank/other financial institutions of Rs 6,435 crore, consisting of fund based (Rs 4,500 crore) and non-fund based (LCs and BGs: Rs 1,935 crore), (b) Rs 175 crore availed from the group companies, and (c) facility availed under the ECLG Scheme amounting to Rs 1,292 crore from the banks and is managing only to pay operating cost with no lease rent to lessors, petition before NCLT stated.

Go First is facing an extreme cash crunch due to negative profitability, inability to generate adequate cash flows and increasing creditor overdues.

Considering the overall situation, the company is facing severe hardships in operating its business due to the limited number of serviceable engines at its disposal, the petition stated. 

"A corporate entity cannot sustain this kind of liquidity crisis for a long time, although, the company and its management has made all efforts to endure as long as it can on account of the financial support provided to it by promoters/shareholders from time to time," the petition said.

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