NCLT New Delhi Orders Liquidation Of Go Airlines (India) Limited

The National Company Law Tribunal (NCLT), New Delhi bench of Justice Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) has ordered the liquidation of Go First Airlines, marking the conclusion of a 20-month-long insolvency process after no viable resolution plan emerged. The tribunal upheld the decision by the Committee of Creditors to liquidate Go Airlines, which approved the liquidation with a 100% vote. The Tribunal stated the CoC in the legislative scheme is empowered to make the decision to liquidate the corporate debtor, at any time after its constitution and before confirmation of the resolution plan. “It is well settled that the decision taken by the CoC for liquidation in commercial wisdom of the CoC should not be interfered with by the Adjudicating Authority”, it noted. Brief Facts On 10.05.2023, the NCLT initiated the Corporate Insolvency Resolution Process against M/s Go Airlines (India) Limited (Applicant/Corporate Debtor) under section 10 of the Code. The CoC (Committee of Creditors) appointed Mr. Shailendra Ajmera (Respondent) as the Resolution Professional (RP). The IRP made a public announcement on 13.05.2023 under Regulation 6 of the IBBI (Resolution Process for Corporate Persons) Regulations, 2016 inviting stakeholders to submit their claims against the Corporate Debtor. The Resolution Plans received were neither compliant with the Code nor commercially acceptable to the CoC. Therefore, the CoC opted for the liquidation of the Corporate Debtor on 23.07.2024. The Applicant had filed an application before the Adjudicating Authority seeking to replace the Applicant with Mr. Dinkar T. Venkatasubramanian to act as the Liquidator of the Corporate Debtor pursuant to the IBBI circular dated 18.07.2023 which recommended the appointment of an insolvency professional as the liquidator other than the resolution professional of a Corporate Debtor. At the CoC meeting on 23.07.2024, the estimated liquidation cost for the liquidation process was informed as Rs. 21.6 crores, which was agreed to be funded by CoC members as per their voting share. With regard to the source of funding for the SIAC arbitration, the CoC availed litigation funding from Burford Capital as per the terms of the Capital Provisions Agreement (CPA) to meet the estimated liquidation costs under Regulation 39B of the CIRP Regulations. The Applicant preferred the application seeking the Liquidation of the Corporate Debtor in terms of section 33(2) of the Code and the appointment of Mr. Dinkar T. Venkatasubramanian as the Liquidator. Observations Section 33(2) of the Code provides that the Adjudicating Authority shall pass an order for liquidation of the Corporate Debtor if the CoC by more than 66% of the votes passes the resolution for liquidation. The Tribunal noted that the CoC approved liquidation with 100%. The Tribunal referred to Sreedhar Tripathy vs. Gujarat State Financial Corporation and Ors., where the NCLAT stated, “The CoC in the Legislative Scheme has been empowered to take decision to liquidate the Corporate Debtor, any time after its constitution and before confirmation of the resolution plan. The power given to the CoC to take decision for liquidation is very wide power …” The Tribunal noted that the CoC, in compliance with Rule 39(B) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, expressed their commitment towards the payment of the liquidation cost and to make available necessary funds from their own source, if required. “In view of this commitment by the CoC, it emerges that CoC Members will contribute for the liquidation cost”, the Tribunal stated. The Tribunal refused to examine the legality of the third-party funding agreement. The Tribunal noted that the proposed funding from a foreign source i.e. Burford Capital was in respect of litigation which is pending in courts of foreign jurisdiction i.e. the SIAC. Also, none of the pending litigations was governed by the provisions of the IBC or the Regulations made thereunder. The Tribunal observed that the CoC is empowered to take decision to liquidate the Corporate Debtor, at any time after its constitution and before confirmation of the resolution plan. It refused to interfere with the decision taken by the CoC in commercial wisdom. The Tribunal allowed the application by ordering liquidation of the Corporate Debtor, namely M/s Go Airlines (India) Limited with directions, inter alia, appointing Mr. Dinkar Tiruvannadapuram Venkatasubramanian as the Liquidator in terms of section 32(1) of the Code; imposing a fresh Moratorium under Section 33(5) of the Code; and directing payment of remuneration and expenses to the Applicant. Case Title: Go Airlines (India) Limited vs. Mr. Shailendra Ajmera Resolution Professional of Go Airlines (India) Limited Case Number: I.A. (Liq.) 33/ND/2024 IN...

NCLT New Delhi Orders Liquidation Of Go Airlines (India) Limited

Tazeen Ahmed

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