Go First's lenders now control resolution process; bankruptcy officials replaced
What's the story
Grounded airline Go First's insolvency plea was accepted by the National Company Law Tribunal (NCLT) last month. Now, its lenders want to take complete control of the resolution process. To achieve that, the committee of creditors (CoC) replaced key bankruptcy officials appointed by the airline earlier, as per the Economic Times. The CoC reached the decision after its first meeting on Friday.
Context
Why does this story matter?
Go First hasn't hit the skies since May 3. However, the beleaguered airline never lost hopes of a revival. Last week, its lenders appointed the CoC, indicating the willingness to support the airline's revival. The appointment of the CoC is expected to fast-track Go First's revival. However, the lenders want to do it their way. Bringing new resolution professionals into the picture shows that.
Control
Creditors changed the interim resolution professional
In its first meeting, the CoC replaced the previously appointed interim resolution professional (IRP), process advisor, and legal agency. With the decision, the committee aimed to show its intent to control Go First's insolvency proceeding. Per Economic Times, the lenders replaced Alvarez & Marsal-backed Abhilash Lal with EY-backed Shailendra Ajmera as the IRP. Abhilash Lal was appointed by Go First.
Other changes
EY will replace Alvarez & Marsal as process advisor
The CoC has also decided to change the process advisor. Go First had appointed Alvarez & Marsal as process advisor but EY will replace it. The committee is expected to change Trilegal as the IRP's legal advisor, with Cyril Amarchand Mangaldas, Luthra & Luthra, and Shroff & Co lined up as replacements. J Sagar Associates will be brought in as the COC's legal advisor.
Reasons
CoC wants to ensure there is no conflict of interest
The committee is expected to file the new changes before the NCLT this week. According to Economic Times, lenders decided to make these changes because they were apprehensive about continuing with the same support system. The CoC wants to ensure there is no conflict of interest. To do so, it is replacing every firm that supported the insolvency proceeding so far.
Revival
Lenders will help if they see a clear path
On Friday, the CoC discussed Go First's revival plan. The airline is seeking Rs. 400 crore from creditors to resume operation. The creditors' current exposure stands at Rs. 6,521 crore and they are willing to inject additional investment if they see a clear revival path. The lenders would want to revive the airline sooner than later, as its reputation has already taken a hit.