India’s Go First lenders to not release more funding to grounded airline – sources

By Siddhi Nayak

MUMBAI (Reuters) – Lenders to India’s Go First are not in favour of releasing additional funding to the grounded airline, given its legal troubles with lessors and complexities related to changes in the bankruptcy law, two banking sources told Reuters on Monday.

Go First’s lenders, which include the Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank, had in-principally approved funding of 4.50 billion rupees ($54.09 million) in June to resume operations and restart the airline.

“When the funding was approved, there was some visibility about the airline restarting operations,” the banker said.

“Now the situation is quite different and the future is bleak,” said a banker with a state-run bank that has exposure to Go First.

None of the sources wished to be identified because they were not authorized to speak to the media.

The Committee of Creditors (CoC) of Go First met earlier in the day, the sources said.

Go First filed for bankruptcy in May but its lessors were blocked from repossessing planes due to a moratorium imposed by Indian courts.

India, however, last month amended its insolvency law, potentially paving the way for lessors to take back their planes.

The country’s aviation regulator, in a court filing, earlier this month said that the law would be applicable retrospectively, which lenders are looking to contest.

“If Jindal Power does not submit a bid, bankers will initiate discussions about liquidation,” the banker said, commenting on an expression of interest Go First received from Jindal Power Ltd on Oct. 12.

The last day to submit bids is Nov. 21, both the sources said, adding that lenders will be seeking a procedural 90-day extension to complete the airline’s resolution process.

($1 = 83.1990 Indian rupees)

(Reporting by Siddhi Nayak; Editing by Shweta Agarwal)