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Creditors of the defunct Go First Airlines are set to auction a prime 94-acre land parcel in Thane, near Mumbai, with a reserve price of approximately INR 1,960 crore. The move follows a Delhi High Court ruling allowing lessors to seize the airline's planes. The land, previously held as collateral by the Wadia group, is expected to fetch between INR 1,200 crore and INR 2,500 crore considering its development potential. Advertisements for the auction will be published soon, giving buyers 60 days to submit bids. Creditors aim to recover part of the airline's INR 50,000 crore debt.
Creditors of the defunct Go First Airlines are preparing to auction a prime 94-acre land parcel in Thane, near Mumbai. This move comes as hopes for reviving the airline dwindle following a recent Delhi High Court ruling that allowed lessors to seize Go First's airplanes. Advertisement
The land parcel, considered a strategic asset in Thane's real estate landscape, will be auctioned with a reserve price of approximately INR 1,960 crore. Newspapers will soon publish advertisements for the auction, giving potential buyers 60 days to submit their bids. Resolution professional Shailendra Ajmera has remained tight-lipped on the matter.
Lenders believe the land itself could be worth INR 1,200 crore. However, factoring in future development potential, the value could realistically reach INR 2,500 crore. This valuable asset was previously held as collateral by the Wadia group for loans taken by Go First. The upcoming auction will be conducted on an "as-is, where-is" basis, meaning the buyer will inherit any future taxes and liabilities associated with the land. It's important to note that approximately four acres of the land have already been acquired by the Thane Municipal Corporation for road projects, and this needs to be factored into bids.
The recent Delhi High Court decision allowing lessors to take possession of Go First's planes significantly reduces the value of the airline as a functioning business. This development leaves creditors with limited options for recovering their debts. Creditors are currently evaluating their next steps with the extended deadline of June 4th approaching. They are likely to seek another extension to allow potential buyers more time to assess the risks and opportunities associated with acquiring Go First.
Two potential buyers have expressed interest in Go First: a consortium led by Nishant Pitti (CEO of EaseMyTrip) and Ajay Singh (chairman of SpiceJet), and Sharjah-based Sky One Aviation. Both bids interestingly factored in potential future arbitration claims Go First may have against engine maker Pratt & Whitney, which the airline blames for its financial woes. Sky One Aviation offered INR 735 crore upfront with a possibility of sharing future arbitration claims, while Ajay Singh's offer included a USD 650 million payment over 12 months and a 10% share in future arbitration claims.
Go First owes creditors over USD 6.2 billion (approximately INR 50,000 crore). Central Bank of India, Bank of Baroda, and IDBI Bank are the largest secured creditors with admitted claims of INR 1,934 crore, INR 1,744 crore, and INR 75 crore, respectively. With the land auction and the uncertain future of the airline itself, creditors face a challenging road ahead in recovering their debts.
This development marks a significant turning point for Go First. The land sale, while potentially yielding some financial recovery for creditors, does little to address the airline's core issues. The coming weeks will be critical as creditors, bidders, and industry stakeholders determine the path forward for Go First, with the possibility of a complete shutdown looming large.
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