Go First case: Banks hope to recover 50% of loans by selling pledged land parcel

A consortium of banks, led by Central Bank of India, are hoping to recover at least half of their loans to beleaguered airline Go First. This recovery is expected to be facilitated by the sale of a land parcel that the Wadias had pledged against the loan of the airlines.

According to a report in The Economic Times, the banks are hoping to recover 50 per cent of Rs 1,965 crore by selling the land parcel in Thane. The auction of the land parcel of 94.7 acres will take place on July 22. 

The reserve price of the land parcel, amounting to Rs 1,965 crore is half of the Rs 3,918.5 crore. 

The lenders are seeking to sell the land parcel under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act even as the airline is undergoing a corporate insolvency resolution process (CIRP), the report. Usually, lenders are prohibited from taking legal action against a company that’s admitted for insolvency. Moreover, they would also require the tribunal’s orders for liquidation of assets, which is yet to come for Go First. 

The report added that in this case, the lenders can put the parcel for sale because they are exercising their rights to recover the loans by invoking the Sarfaesi Act. 

Central Bank is the largest lender with Rs 1,934 crore loans, Bank of Baroda with Rs 1,744 crore and Dena Bank with Rs 75 crore.