Going bust to recover

The Insolvency and Bankruptcy Code (IBC), a law set up under the NDA government faces its first test of a company not in default applying for bankruptcy proceedings. What happens in the GoFirst case will set the template going forward. A Special Report

When the NCLT (National Company Law Tribunal) admitted the Go First Airline bankruptcy plea on Wednesday, May 10, it said that there was "admittedly" a debt and a default by Go First. Therefore, under the circumstances, the Tribunal said that it was left with no option except to admit the airline's petition. "As a necessary consequence of Go First plea behind admitted, a moratorium is being declared," it said.

Not surprisingly, GoFirst Chief Executive Officer Kaushik Khona told news agency ANI "I think this is a historic decision. It's going to help the process...Millions of prayers have been heard and I think we could not have got a better order than this... We are very happy that we got this order, an admission and a moratorium".

He said that the process was in line with the spirit of the Insolvency and Bankruptcy Code (IBC). "We are very grateful for the entire process we had undergone and I am sure this is in line with the spirit of IBC so that we can decide on the revival, which the IRP (Insolvency Resolution Professional) will do," Khona said.

So, what does this NCLT order mean?