TBM Staff - Mumbai The fate of Go First hangs in the balance as potential buyers, including a consortium led by SpiceJet Chief Ajay Singh and Sharjah-based Sky One, propose conditional payments linked to the resolution of a lawsuit against engine manufacturer Pratt & Whitney. Information from CNBC-TV18 reveals that the upfront payments in both proposals may be inadequate to cover the costs of insolvency resolution.
Two bids have been submitted for Go First, with Ajay Singh and Nishant Pitti from Busy Bee Airways offering INR 16 billion in a joint bid, and Sky One presenting an alternative offer. However, concerns arise as neither bidder has put forth a significant initial payment to address the Corporate Insolvency Resolution Process (CIRP) expenses, estimated to be around INR 600 crore. These expenses take precedence under India’s Insolvency and Bankruptcy Code (IBC) waterfall mechanism for dues recovery.
According to sources, the Ajay Singh-Nishant Pitti consortium proposed an upfront payment of INR 290 crore, committing to fully repay financial creditors from Pratt & Whitney arbitration proceeds. On the other hand, Sky One offered INR 410 crore upfront to lenders and pledged 25% of arbitration proceeds to creditors.
The uncertainty surrounding the bids raises questions about the financial viability of the sale and the ability of the proposed payments to meet the necessary resolution expenses. The situation underscores the intricacies of the Corporate Insolvency Resolution Process and the challenges in securing a smooth transition for Go First.
(Source: CNBC-TV18)
