Go First lenders jittery on interim finance

Lenders to Go First have turned wary of extending more loans to help the grounded airline return to skies, two people aware of the matter said, given the protracted legal battle between the company’s lessors and the resolution professional. The banks had agreed to grant an interim financing of ₹600-700 crore to help the low-cost airline take off with a lean fleet and stay afloat.

- Anirudh Laskar & Shayan Ghosh

“The lenders have already disbursed an interim financing of ₹100 crore to Go First," one of the two people said on condition of anonymity. However, lessors’ resistance to the resolution professional accessing the 52-odd aircraft until repayment of dues has stalled the plan, leaving lenders wary of extending any further interim credit, according to the two people.

The planned interim financing was meant to help Go First meet basic working capital requirements and resume flights with 15-20 aircraft so it generates cash to repay dues.

“The lenders will take a call on more funds after the (Delhi) high court decides on the litigation with aircraft lessors," said the first person who works with one of the lenders.

The airline owes over ₹6,521 crore to financial creditors, including Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank. It has also defaulted on payments of ₹1,202 crore to vendors and ₹2,660 crore to lessors. Despite the lenders’ offer of interim finance, the Wadia Group-founded airline and the lessors continue fighting in the Delhi high court over inspection, access and resumption of Go First’s grounded fleet.

“The entire resolution process has been frustrated by the legal roadblocks. A stronger government stance is crucial to sustain the viability of insolvency law," the second said on condition of anonymity. “A law on resolution process is redundant if it is plagued by legal cases that keep going on for years," the person added.