National Company Law Tribunal (NCLT) on Wednesday gave a major relief to airliner Go First as it admitted its voluntary plea to initiate an insolvency resolution process.
According to the report in NDTV, Go First CEO Kaushik Khona has termed the order a "perfect example" in the context of reviving a viable business before it becomes unviable.
He as per the report also said it was "historic".
The crucial decision comes at a time when foreign lessors, including major global names such as Jackson Square Aviation, SMBC Aviation Capital, and CDB Aviation's GY Aviation Leasing, are trying to repossess 40 Go First planes over missed rental payments. Any such recoveries are prohibited once bankruptcy proceedings are initiated for a company, the report said.
It is for the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate its contracts and debts.
“The NCLT ordered that the company be kept functioning and none of its 7,000 employees be laid off,” the report.
NCLT as per the report has also put the company under the protection of a moratorium and directed the suspended board of directors to assist the IRP in running the company during insolvency proceedings.
The low-cost carrier, which until recently was India's fourth-largest airline by passengers flown, filed for bankruptcy protection, blaming "faulty" Pratt & Whitney engines for the grounding of about half its 54 Airbus A320neos, it said.
It added the US engine maker, part of Raytheon Technologies, has called the claims without evidence.
Aviation regulator DGCA had on Monday issued a show cause notice to the troubled budget carrier "for their failure to continue the operation of the service in a safe, efficient and reliable manner", and directed it to immediately stop bookings and sale of tickets directly or indirectly till further orders.
The airline operator has been asked to submit their reply within 15 days of the receipt of this notice, based on which a decision on the continuation of their Air Operators Certificate (AOC) will be taken.
Earlier, the airline had suspended the sale of tickets till May 15, and has cancelled flights till May 19.
The crisis underlines the fierce competition in a sector dominated by IndiGo and the recent merger of Air India and Vistara under the Tata conglomerate.