NCLAT upholds Go First liquidation but leaves open narrow window for revival

The National Company Law Appellate Tribunal (NCLAT) on Friday upheld the liquidation of Go First Airlines, dealing a final blow to hopes of revival through conventional insolvency proceedings..However, the Appellate Tribunal left open a small window for potential revival of the airline under a compromise or arrangement scheme governed by Section 230 of the Companies Act, 2013..The coram of Chairperson Justice Ashok Bhushan and Members Barun Mitra and Arun Baroka said, “We have also observed above that it is always open for the Appellant – M/s. Busy Bee or any other eligible Applicant, to submit a scheme for compromise and arrangement before the Liquidator as per Regulation 2B of the Liquidation Process Regulation.”.Regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, governs the process of compromise or arrangement under Section 230 of the Companies Act, 2013, during liquidation. It mandates that any such compromise or arrangement must be completed within ninety days from the liquidation order date. Notably, individuals ineligible to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC) are also barred from participating in these compromises or arrangements. Furthermore, the regulation specifies that the liquidator can file a proposal for compromise or arrangement only if the Committee of Creditors recommends it under Regulation 39BA of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This proposal must be submitted within thirty days from the liquidation commencement date. The time spent on such a compromise or arrangement, up to ninety days, is excluded from the overall liquidation period. If the compromise or arrangement is sanctioned by the Tribunal, the associated costs are borne by the corporate debtor; otherwise, the proposing parties bear these costs.The 90-day window may expire in April, considering that the National Company Law Tribunal (NCLT) ordered liquidation of Go First on January 20..Go Airlines entered insolvency in May 2023 under Section 10 of the IBC after grounding a majority of its fleet due to engine supply issues from Pratt & Whitney (P&W). Despite initial interest from resolution applicants, including Busybee Airways, no compliant bids were received. The Delhi High Court’s April 2024 order allowing lessors to de-register and repossess aircraft further diminished revival prospects.Left without any scope for recovery, the CoC decided to liquidate the airline. Busybee Airways contended that the airline’s assets - including its Air Operator’s Permit (valid till 2027), airport slots and pending arbitration claims against P&W - made it viable for revival.The liquidator and the CoC argued that with no operational aircraft, revoked slots and terminated purchase agreements for new planes, liquidation was the only feasible option..The following are key findings of the Appellate Tribunal in today's verdict..No compliant resolution plan received The Tribunal noted that despite multiple extensions, no compliant resolution plan was submitted under the Corporate Insolvency Resolution Process (CIRP). Busybee Airways, the sole serious resolution applicant, had withdrawn its plan and sought a refund of its earnest money deposit (EMD), indicating a lack of intent to proceed.The CoC had already exhausted 14 months in the CIRP, making liquidation the only feasible option under Section 33(2) of the IBC. The order stated,“In response to the invitation of EoI, only three entities have submitted the EoIs, out of which one was M/s. Busy Bee in Consortium. Only two Resolution Plans were received by the RP and both Resolution Plans, which were received, were not found compliant. The RP, thus, has communicated the Resolution Applicants, including the Appellant that their Resolution Plans cannot be considered…. it is clear that there was no compliant Resolution Plan received in the CIRP. The CIRP has run its full course, giving enough opportunity to the RP to revive the CD and it was only on 23.07.2024, after more than 14 months of initiation of CIRP, a Resolution was passed by the CoC to liquidate the CD.”.Commercial wisdom of CoC upheld The NCLAT affirmed the CoC’s decision, noting that the airline had been non-operational since May 2023, with all aircraft deregistered and slots revoked.“Learned Counsel for the RP has submitted that after the judgment of the Delhi High Court dated 24.04.2024, lenders have taken back all aircrafts and as on date, no aircraft is left with the CD. It is further submitted that all slots, which was allotted to the CD, have been revoked and the only asset left is arbitration proceedings with regard to arbitration, which is initiated by the CD against P&W in the Singapore International Arbitration Center. It is submitted that present was a case where CoC has rightly taken a decision to liquidate the CD. After considering the submissions of the parties and materials on record, we do not find any error in the Resolution of the CoC, taken in its 37th Meeting on 23.07.2024 to liquidate the CD. The Adjudicating Authority has not committed any error in allowing the Liquidation Application filed by the RP,” the NCLAT ruled. .Option for compromise scheme left open The Appellate Tribunal clarified that Busybee or any other eligible party could still submit a compromise or arrangement under Section 230 of the Companies Act, 2013, within 90 days of the liquidation order (by April 20, 2025).“The compromise or arrangement under Section 230 of the Companies Act, 2013 can be considered within the period of 90 days from order of liquidation.The order of liquidation has been passed on 20.01.2025. Hence, still there is an opportunity to M/s Busy Bee Airways Pvt. Ltd. and any other interested party to submit a compromise or arrangement and it can be considered in accordance with statutory requirement as provided under Regulation 2B of the Liquidation Process Regulation and Section 230 of the Companies Act,” the order said..[Read Judgment]