Go First Airways, which filed for bankruptcy last week, is seeking a moratorium from India's National Company Law Tribunal (NCTL) to restrain lessors from taking back its aircraft and creditors from cashing guarantees and letters of credit (L/Cs).

The Indian airline's bankruptcy filing lists Central Bank of India, Bank of Baroda, IDBI Bank, Axis Bank and Deutsche Bank as creditors.

Lessors take action

Six lessors of planes invoked L/Cs issued to them by banks in respect of aircraft leased to India's Go First Airways last week (DC World News, 3 May 2023).

The NCTL, in its capacity as India's bankruptcy court, has yet to decide whether it will grant a moratorium after it heard Go First's case on Thursday. But lessors such as Dublin's GY Aviation Lease, SMBC Aviation Capital and Pembroke Aircraft Leasing have started proceedings to invoke L/Cs or take back possession of aircraft leased to the airline.

The Indian carrier owes financial creditors US$798 million which, according to Acuite Ratings, includes loans as well as non-fund instruments like L/Cs.

Bank concerns

Bankers are reportedly perturbed that Go First never hinted at plans for an insolvency filing.

"The company has been making regular repayments, and we are not sure why they took this step," one banker told the Mint news channel.

It reports that another banker said he believes that the airline might be trying to bring its troubles to the attention of the government in the hope that it will intervene.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.