Go First liquidation a possibility; lowballed banks may seek better offer

Lenders to Go First may ask bidders in the resolution process for the airline to improve their offers in order to maximise recoveries, people involved in the process said. The lenders may opt for liquidation if the bids aren’t good enough, said the people cited above.

The only two bids for the airline were opened Friday and resolution professional (RP) Shailendra Ajmera will now check if they are compliant with the Insolvency and Bankruptcy Code (IBC). Central Bank of India and Bank of Baroda are the main lenders to the grounded carrier. The RP has admitted claims of Rs 7,040 crore out of which Rs 4,257 crore is from financial creditors led by Central Bank of India.

None of Bidders in 'Best of Financial Health'

People involved in the process said that only a small portion of the total bid amount is upfront and the rest is contingent on factors such as retention of aircraft, slots and bilateral rights as well as clarity on compensation in its case against American engine maker Pratt & Whitney.

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A consortium of SpiceJet owner Ajay Singh and Nishant Pitti, co-owner of online travel firm EaseMyTrip, is the front runner with a total bid of Rs 600 crore, said the people cited above.

The other bid is by Sharjah-based SkyOne owned by Jaideep Mirchandani, who also has a majority stake in regional carrier Zoom Air, which has been grounded for over five years.

"Both plans were opened but lenders have not yet gone through the deals of both plans," said a person familiar with the matter. "Details will be available after the minutes of the meeting are circulated in a couple of days but before lenders proceed, legal and compliance scrutiny is crucial."

If the offers aren't improved, there's a possibility that lenders may prefer to bite the bullet.

"Upfront payment by both the applicants are too low. Lenders will of course negotiate and complete the due process," the person said. "But in case the value does not move, then there is probably little option other than liquidation because both applicants are also not in the best of financial health."

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Sources said that the data room didn't have enough information and hence the conditions associated with the bids.

"Since it's a bankrupt company, it didn't have employees who could give detailed insights about the company," one of the bidders said. "So, there are many other parameters that need to be examined. We are open to negotiations with lenders."

This is the second attempt by lenders to sell the company after a disappointing first round in October when Naveen Jindal's expression of interest (EoI), the only preliminary inquiry to make the cut as a bidder for the airline, did not translate into a final bid.

The Wadia-owned airline had filed for voluntary insolvency proceedings on May 3 before the Mumbai bench of the NCLT, attributing the decision to protracted delays in sourcing airworthy engines from Pratt & Whitney.