TEST: Lenders considering forensic audit of Go First to check on funds

They want to be sure which entities used the loans granted by them to the airline: Sources

Indigo
Indigo
Ranchi
2 min read Last Updated : Jun 19 2023 | 7:32 PM IST
Lenders are likely to order a forensic audit of Go First airline, which has been under insolvency resolution process since the last month, to check if there has been any diversion of funds, said sources privy to the development on Monday.
Go First’s insolvency application said it owes financial creditors—Deutsche Bank, Bank of Baroda, Central Bank of India and IDBI Bank among them—Rs 6521 crore ($798 million) as on April 28.

Go First declared insolvency due to a cash crunch on May 2 and its application was admitted by the National Company Law Tribunal on May 10. The tribunal had confirmed Abhilash Lal of Alvarez & Marsal as the interim resolution professional.
The airline's committee of creditors (CoC) conducted its first meeting earlier this month where the grounded carrier's revival plan was discussed. In this meeting, Lal was replaced with Shailendra Ajmera of consultancy EY as the interim resolution professional as the former was selected by the Go First management.

Lenders also selected a new resolution process advisor and a legal counsel for the committee. All the resolutions were approved at this meeting with a hundred per cent vote.
While Lal submitted a revival plan to the Directorate General of Civil Aviation (DGCA) last month, sources said that Ajmera could submit a new revival plan soon after analysing the funds with the carrier.

Sources added that lenders may order a forensic audit just to be sure which entities actually used the loans that were granted by them to the airline. Go First did not immediately respond to Business Standard's request for a statement on this matter.
In a resumption plan submitted to the DGCA, Lal had said that the airline has a requisite number of employees to fly its 26 operational planes. It said the airline can operate 152 flights per day if it is allowed to resume services.

The resumption plan faces a challenge from lessors who have approached courts seeking deregistration of aircraft or restraint on use of planes by Go First.
While the Delhi High Court has reserved its order on writ petitions seeking deregistration of planes, NCLT has admitted pleas from lessors seeking restraint on use of planes and inspection of aircraft engines.

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Topics :Aero IndiaGo AirAviation IndiGo

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