The low-cost airline arm of IndiGo Air’s Go First announced a suspension of all its flights from May 3-5, as it needs to solve its financial crisis. The company on its own also filed for insolvency resolution proceedings in the National Company Law Tribunal (NCLT) on Tuesday, May 2, 2023. Go First cited that the faulty engines by Pratt & Whitney are the main reason for the company’s current situation.
The company realised and accepted the fact that it cannot pay debts and sought help from someone to sort it out, business is insolvent, its termed voluntary insolvency. When the company goes insolvent, it can proceed to voluntary liquidation.
Voluntary Liquidation is the dissolution of a company with approval from shareholders and creditors of the company. It is a time-bound process that needs to be completed within 270 days from the date of commencement of Voluntary Liquidation.
Go First had to take this step due to the increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines. This resulted in the airline being forced to ground 25 aircraft, which is approximately 50 per cent of its Airbus A320neo aircraft fleet as of 1 May 2023.