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Deutsche Bank’s Go Airlines loans settled out of court, ET TravelWorld

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<p>Deutsche Bank’s Go Airlines loans settled out of court</p>
Deutsche Bank’s Go Airlines loans settled out of court

Deutsche Bank has settled the loans it extended to Go Airlines out of court with its promoters Wadia Group, people aware of the development said. Go Airlines, which operated Go First Airlines, is undergoing voluntary liquidation.

Last week, Deutsche Bank conveyed to its resolution professional Shailendra Ajmera and lenders that it wants to relinquish itself as a member of the committee of creditors (CoC) since it has separately settled its debt with the promoter, people cited above said.

Exit of the German bank will not have any impact on the debt resolution or recovery of dues, a senior consultant told ET. The RP, backed by EY, recently extended the date to submit expressions of interest from potential bidders for the distressed airline by a month to September 8.

A Go First spokesperson in a statement said, “We are not aware of settlement of any such loan. However, Britannia Industries is no way involved with Go First directly or indirectly for any loans provided.”

Deutsche Bank and Ajmera declined to comment. According to the initial list of claims filed by creditors on June 8, Deutsche Bank had filed INR 1,365 crore-claims which were classified as unsecured creditors.

Out of this, Deutsche Bank India claimed INR 855 crore while DB International Asia along with Catalyst Trusteeship claimed INR 510 crore. Both claims from Deutsche Bank were not verified as on June 8, the latest available data show.

Media source first reported on May 12 that Deutsche Bank provided the Mauritius-based Wadia Group company USD 300 million in 2021 and 2022 by creating charge on the bank account of Britannia Industries’ parent in London. During the same period, the company created USD 190 million fixed deposits that were used as security to finance Go First, ET had reported.

The German bank has not disclosed how the loan was settled in its communication to the RP. It is likely that the bank has fully recovered its dues by settling them against the USD 190-million deposits, said one of the persons cited above.

The RP has received claims amounting to INR 24,641 crore. However, only INR 5,117 crore claims were verified.

Secured creditors include just three banks with claims of INR 3,752.4 crore. These are the Bank of Baroda, with verified claims of around INR 1,744 crore, Central Bank of India with RsINR1,924 crore, and IDBI Bank INR 74 crore claim.

The Delhi National Company Law Tribunal had admitted Nusli Wadia-promoted Go Airlines under the corporate insolvency resolution process on May 10 — a move that is opposed by aircraft lessors.

Indian airlines’ domestic traffic up 26% in July, ICRA expects lower loss for aviation industry

ICRA expects the Indian aviation industry to report a lower net loss of INR 50-70 billion in FY2024. The airlines’ ability to increase yields proportionate to their input cost hikes will be the key to expanding their profitability margins, said the agency. It added that aircraft manufacturers face supply chain challenges, as reflected in the grounding of a certain proportion of the fleet by some airlines.

Lessors including GY Aviation Lease, SMBC Aviation Capital, Pembroke Aircraft Leasing want to take back their planes.

However, since moratorium comes into effect after a company gets admitted for insolvency, lessors cannot repossess their airplane and thus oppose the corporate insolvency process.

The airline has defaulted on INR 3,802 crore to its aircraft lessors and vendors, it said in its insolvency petition with the NCLT.

The airline has attributed its woos to the faulty engines supplied by Pratt & Whitney, claiming this forced it to ground half of its fleet.

Last month, a one-judge bench at the Delhi High Court allowed leasing companies to access aircraft leased to Go First for inspection and maintenance, though they were still unable to repossess them while the airline’s operations remain stalled.

Go First filed a writ petition to a two-judge bench at the same court challenging the decision. It was overturned and the airline was told it will be responsible for the maintenance and upkeep of the aircraft. Lessors can inspect their planes once a month. Go First even appealed to the Supreme Court but couldn’t get the Delhi court’s order overturned.

While Go First has got approval from the country’s aviation regulator the Directorate General of Civil Aviation to resume operations, it won’t be easy.

Two weeks ago, the airline had flown an aircraft outside of Mumbai without passengers. This was followed by an appeal by its lessor SMBC to quash its right to fly as the leasing agreement on the aircraft has been terminated by the lessor due to defaults, said a person in the know.

Go First hasn’t yet arrived at an out-of-court settlement with the lessors, he added.

  • Published On Aug 14, 2023 at 12:00 PM IST

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