{"id":35186,"date":"2023-05-03T12:32:23","date_gmt":"2023-05-03T07:02:23","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=35186"},"modified":"2025-04-20T22:28:18","modified_gmt":"2025-04-20T16:58:18","slug":"go-first-files-for-voluntary-insolvency-proceedings-with-nclt","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/go-first-files-for-voluntary-insolvency-proceedings-with-nclt\/","title":{"rendered":"Go First Files for Voluntary Insolvency Proceedings With NCLT"},"content":{"rendered":"<h3>\u00a0 <strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in news?<\/strong><\/li>\n<li><strong>What is National Company Law Tribunal?<\/strong><\/li>\n<li><strong>What is Voluntary Insolvency?<\/strong><\/li>\n<li><strong>News Summary: Go First files for voluntary insolvency proceedings with NCLT<\/strong><\/li>\n<li><strong>Why Air Carrier Go First Airways took this drastic step?<\/strong><\/li>\n<li><strong>What happens now?<\/strong><\/li>\n<li><strong>What does it mean for Indian aviation?<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>Air Carrier Go First Airways filed for insolvency resolution proceedings in the National Company Law Tribunal. It has also suspended its flights for the next two days.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>What is National Company Law Tribunal?<\/strong><\/h2>\n<ul>\n<li><strong>About<\/strong>\n<ul>\n<li>NCLT is a quasi-judicial authority incorporated for dealing with corporate disputes that are of civil nature arising under the Companies Act.<\/li>\n<li>The primary function of the NCLT is to adjudicate on matters related to corporate law, including disputes between companies and their stakeholders, as well as insolvency and bankruptcy cases.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Functions<\/strong>\n<ul>\n<li>Disposal of all proceedings <strong>under the Companies Act<\/strong> such as arbitration, arrangements, compromise, reconstruction, and winding up of the company;<\/li>\n<li>Adjudicating Authority for insolvency proceedings <strong>under the Insolvency and Bankruptcy Code, 2016<\/strong>;<\/li>\n<li>Possess the authority to dispose of cases pending before the <strong>Board for Industrial and Financial Reconstruction (BIFR)<\/strong>, as well as, those pending under the <strong>Sick Industrial Companies (Special Provisions) Act<\/strong>, 1985.<\/li>\n<li>Can take cases pending before the <strong>Appellate Authority for Industrial and Financial Reconstruction<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is Voluntary Insolvency?<\/strong><\/h2>\n<ul>\n<li>In simple words, voluntary insolvency means that the company has accepted its business is insolvent.<\/li>\n<li>It is a process in which the company says it cannot pay debts and needs help from someone to sort it out.\n<ul>\n<li>When the company goes insolvent, it can proceed to voluntary liquidation.<\/li>\n<\/ul>\n<\/li>\n<li>This process refers to the dissolution of a company with approval from shareholders and creditors of the company.<\/li>\n<li>It is a time-bound process which needs to be <u>completed in 270 days from the date of commencement of Voluntary Liquidation<\/u>.<\/li>\n<\/ul>\n<h2>\u00a0<\/h2>\n<h2><strong>News Summary: Go First files for voluntary insolvency proceedings with NCLT<\/strong><\/h2>\n<ul>\n<li>Cash-strapped carrier Go First has filed for voluntary insolvency proceedings with the NCLT.<\/li>\n<li>Go First is the first Indian carrier since Jet Airways to go to the NCLT under the Insolvency and Bankruptcy Code (IBC).\n<ul>\n<li>IBC is a comprehensive legislation introduced by the government in 2016 to deal with insolvency and bankruptcy proceedings in a time-bound and efficient manner.<\/li>\n<li>The primary objective of the IBC is to promote entrepreneurship and facilitate the resolution of distressed assets, while balancing the interests of all stakeholders.<\/li>\n<li>The IBC establishes several important institutions, including:\n<ul>\n<li>the Insolvency and Bankruptcy Board of India (IBBI), which regulates insolvency professionals and information utilities, and<\/li>\n<li>the National Company Law Tribunal (NCLT), which hears and decides corporate insolvency cases.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why Air Carrier Go First Airways took this drastic step?<\/strong><\/h2>\n<ul>\n<li><strong>Unavailability of aircraft<\/strong>\n<ul>\n<li>The airline has been facing headwinds with the unavailability of aircraft for many quarters.<\/li>\n<li>All its A320neo aircraft are powered by Pratt &amp; Whitney and the engine manufacturer has had issues supplying replacement engines.<\/li>\n<li>This resulted in the airline being forced to ground 25 aircraft.\n<ul>\n<li>This is approximately 50 per cent of its Airbus A320neo aircraft fleet as of 1 May 2023.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Financial woes<\/strong>\n<ul>\n<li>Go First said has lost revenue worth \u20b910,800 crore due to the grounding of close to 50 per cent of its A320neo fleet.<\/li>\n<li>The airline has also sought compensation worth \u20b98,000 crore in the Singapore International Arbitration Centre (SIAC).\n<ul>\n<li>SIAC is a leading institution for the resolution of commercial disputes through arbitration.<\/li>\n<li>It was established in 1991 as an independent, not-for-profit organization by the Singapore Ministry of Law.<\/li>\n<li>It aims to provide a neutral and efficient forum for the resolution of commercial disputes.<\/li>\n<\/ul>\n<\/li>\n<li>In case the arbitration is successful, the company will be able to address the liabilities of its creditors, small and large.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What happens now?<\/strong><\/h2>\n<ul>\n<li>Go First has applied to the NCLT because of the persistent issues with the engines supplied by Pratt and Whitney.\n<ul>\n<li>The engine supplier, according to the airline, has failed to repair those engines and\/or provide sufficient spare leased engines.<\/li>\n<\/ul>\n<\/li>\n<li>Once the application is admitted under NCLT, an interim resolution professional will take over and operate Go First.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What does it mean for Indian aviation?<\/strong><\/h2>\n<ul>\n<li><strong>Second incident in five years<\/strong>\n<ul>\n<li>Go First&#8217;s bankruptcy filing would be the second in five years after Jet Airways failure in April 2019 in the aviation industry.<\/li>\n<li>Although, Jet Airways although has been rescued by Murari Lal Jalan and asset management firm Kalrock. It is yet to commence its operations in the market.<\/li>\n<li>Hence, how much time Go First takes to hit the runway again will be keenly observed.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Sudden availability of workforce at all levels<\/strong>\n<ul>\n<li>Currently, the demand for pilots was picking up and airlines were being pushed into a corner by pilot bodies for salaries and minimum flying hours guarantee.<\/li>\n<li>In this context, an airline getting into bankruptcy resolution would mean that <u>there is likely to be a sudden availability of workforce at all levels<\/u>.<\/li>\n<li>As a result, the airports, passengers, employees and just about everyone in the ecosystem will be impacted.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1)<\/strong> <strong>What is Singapore International Arbitration Centre (SIAC)?<\/strong><\/h3>\n<p>SIAC is a leading institution for the resolution of commercial disputes through arbitration. It was established in 1991 as an independent, not-for-profit organization by the Singapore Ministry of Law. It aims to provide a neutral and efficient forum for the resolution of commercial disputes.<\/p>\n<h3>\u00a0<\/h3>\n<h3><strong>Q2) What is Insolvency and Bankruptcy Code (IBC), 2016?<\/strong><\/h3>\n<p>\u00a0IBC is a comprehensive legislation introduced by the government in 2016 to deal with insolvency and bankruptcy proceedings in a time-bound and efficient manner. The primary objective of the IBC is to promote entrepreneurship and facilitate the resolution of distressed assets, while balancing the interests of all stakeholders.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/aviation\/go-first-insolvency-proceedings-nclt-pratt-whitney-8587991\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Go First files for voluntary insolvency proceedings with NCLT, blames US engine maker for woes<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/about-us\/affiliated-offices\/nclt.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Ministry of Corporate Affairs<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.hindustantimes.com\/business\/go-first-files-for-voluntary-insolvency-what-happened-to-the-airline-101683025076142.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Hindustan Times<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.moneycontrol.com\/news\/business\/go-first-insolvency-what-does-it-mean-for-indian-aviation-10515051.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Money Control<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.livemint.com\/companies\/news\/go-first-declares-bankruptcy-how-does-this-impact-other-airlines-11683042212953.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Live Mint<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Voluntary insolvency means that the company has accepted its business is insolvent.<\/p>\n","protected":false},"author":5,"featured_media":35187,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-35186","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=35186"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35186\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/35187"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=35186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=35186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=35186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}