The moot questions that emerge from the Wadia group-owned Go Airlines (India) Ltd voluntary corporate insolvency filings show that lending rules were allowed to fall by the wayside. The banks continued expanding loan amounts, extending loan tenures despite mega losses that GoFirst was incurring. The loans were not securitized by adequate liquid assets. The company has blamed the US engine maker Pratt & Whitney (P&W) for its financial woes saying that operations had to be suspended due to the defective P&W engines supplied. NCLT has appointed an interim resolution professional (IRP) to operate the airlines as a going concern. NCLT’s appellate tribunal has turned down the challenge to this order, which was mounted by aircraft lessors.

GoFirst owes financial creditors Rs 6,521 crores, the Indian banks consortium led by Central Bank of India is owed Rs 3,910 crore. Vendors and Aircraft lessors are among its list of other creditors. A total sum of Rs 11,463 crore is owed and the company has stated that its assets are not enough to meet its liabilities. Blaming P&W for its cash crunch GoFirst has disclosed in its petition that half of its fleet of 54 Airbus A320neo aircraft is grounded.

GoFirst’s economic crisis did not strike suddenly and the banks were not unaware about it. It started going downhill from 2019 and the instances of number of grounded planes were increasing. All of its planes had only one type of faulty engine from the same maker (P&W), the banks were aware of all these risks and yet chose to look the other way and not ask for adequate securities from the Wadia group, that had other stable and diversified businesses. What use are the pledged shares of a company that has gone bust. The banks did not secure their interests and kept funneling into this sinking enterprise. The promoters on the other hand were active and the inter-company deposits (ICD) from Go Airlines promoters’ company Bombay Burmah Trading Corporation Ltd was repatriated. Tiny infusions were made by the promoters to avail more loan amounts. Defaults by GoFirstr led to invocation of LCs by lessors, which ultimately devolved to the banks. It is they, who are left holding the can.