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Go First, an Indian airline, has filed for bankruptcy.

Go First, an Indian airline, has filed for bankruptcy.

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Cash-strapped Go First, an Indian airline, has filed for bankruptcy proceedings on Tuesday, citing “faulty” Pratt & Whitney engines as the reason for grounding nearly half of its fleet.

India witnesses its first significant airline collapse since Jet Airways’ bankruptcy in 2019. The development highlights the intense competition in the aviation industry, which is majorly dominated by IndiGo and the recent merger of Air India and Vistara under the Tata conglomerate.

According to a bankruptcy filing viewed by Reuters, First’s overall debt to financial creditors stands at 65.21 billion rupees ($797m) as of April 28.

According to a recent filing, the company has not defaulted on its dues as of April 30. However, it has failed to make payments to its operational creditors, including vendors and aircraft lessors, amounting to 12.02 billion rupees ($146.9m) and 26.60 billion rupees ($325m), respectively.

In a recent statement, Go First has announced its filing with the National Company Law Tribunal. The move comes after Pratt & Whitney, the sole engine supplier for the airline’s Airbus A320neo aircraft fleet, declined to adhere to an arbitration order. The order required the release of spare leased engines to the airline, which would have enabled it to resume full operations.

Reuters’ attempts to reach Pratt & Whitney for comment were unsuccessful at the time of publishing. Raytheon Technologies’ parent company was unavailable for comment at the time of publication.

Indian Airlines Plagued by Pratt & Whitney Engine Issue Warned by Safety Authorities

Pratt & Whitney, a leading aircraft engine manufacturer, has reportedly acknowledged being impacted by the prevailing supply chain challenges in the industry. However, the company has expressed optimism that the situation is likely to improve in the latter half of this year, which would enable it to ramp up production of both new and refurbished engines. These comments were made in response to queries from Indian media outlets.

According to analysts, IndiGo, a bigger competitor, has been able to weather the impact more effectively due to its larger fleet and deeper pockets.

Go First, previously known as GoAir and owned by the Wadia Group, has announced the cancellation of flights from May 3 to May 5 due to operational reasons, according to a statement on its website.

India’s Civil Aviation Minister Jyotiraditya Scindia stated that the government of India has been providing all possible assistance to the airline. The stakeholders involved have also been engaged in the matter.

Airline Collapse Could Benefit Rival Companies Amid Post-Pandemic Travel Surge

Sudden Disruption Causes Chaos and Uncertainty

According to Jinesh Joshi, a research analyst with Prabhudas Lilladher, the unexpected disturbance in operations is expected to have a positive impact on other players and lead to a rise in airfares due to supply constraints.

Go First’s lenders were reportedly caught off guard by the move, according to two bankers familiar with the situation who spoke to Reuters.

According to a banker, Go First’s management recently met with lenders, but no notification was provided. According to sources, lenders are set to convene a meeting in the near future to evaluate the current circumstances and determine the next steps to be taken.

According to a report by Acuite Ratings in January, Go First holds rated Indian bank debt worth 56 billion rupees ($685m). Central Bank of India and Bank of Baroda hold the biggest share.

Aviation Consulting Firm CEO Surprised by Bankruptcy Filing Go First’s future remains uncertain, according to sources. New leadership sought for vehicle of change.

Go First, an Indian airline, has reported a significant increase in the number of grounded aircraft due to issues with Pratt & Whitney’s engines. The airline stated that the percentage of grounded aircraft rose from 7% in December 2019 to 50% in December 2022. This has resulted in a loss of 108 billion rupees ($1.32bn) in revenue and additional expenses for the company.

Go First, an Indian airline, has experienced a decline in its market share from 8.4 percent in January to 6.9 percent in March, according to the latest data from the Indian aviation regulator. This decline comes as a result of problems that caused the airline to postpone its intended $440m IPO in 2021.

Airline Seeks Funds, Wadia Group in Talks to Sell Majority Stake or Exit Shareholding. Wadia Group remained silent when contacted by Reuters for comment via email.

Groundings Prompt Aircraft Repossessions and Lease Withdrawals, Says Go First

Local media sources reported that employees were caught off guard upon learning about the cessation of daily operations, as per three anonymous pilots. Pilots have reported experiencing salary delays for the past few months.

Go First, an airline company, expressed their empathy towards their employees in an email viewed by Reuters. The company acknowledged that the news may cause distress and assured their commitment to providing support during this challenging period.

Read Also: Securing a Mortgage After You File a Bankruptcy in Las Vegas: What to Expect.

What is Chapter 7 Bankruptcy?

What is Chapter 7 Bankruptcy?

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Bankruptcy doesn’t have to be a totally negative thing. If you’ve got unsecured debts, it may be in your best interest to go the route of a Chapter 7 bankruptcy. You won’t be able to undertake this completely on your own. That’s why you should seek out an Experienced chapter 7 bankruptcy attorney who will know how to get through this process and you won’t have to worry about this being done incorrectly. 

What Exactly Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, which is also known as liquidation or straight bankruptcy, allows you to rid yourself of several kinds of unsecured debts. These unsecured debts include medical bills, personal loans, and credit card debt. This should be considered as a last resort to resolving financial issues. It’s a great way to reset your finances and has helped many people feel a sense of relief and have a fresh start. 

It’s important that you go into the Chapter 7 process understanding that there will be a long term negative effect when it comes to your credit. You’ll also be expected to give up some possessions, depending on if they’re a part of your debt. In fact, you may be asked to sell your non-exempt assets. 

Chapter 7 really is the fastest and simplest type of bankruptcy. For this reason, it’s also the most common for people to get, at 63 percent of all bankruptcy cases in 2019. 

How Do You Know if Chapter 7 is Right for You? 

You won’t automatically be able to request to start Chapter 7 bankruptcy proceedings. You will need to give your lawyer your records that detail your income, expenses, and the secured and unsecured debt you have. Then, they’ll conduct a means test to see if your disposable income is under the median income for your state. 

Since the income level for the means test varies by state, there’s no simple way for you to determine if you qualify. Once you know that you are eligible, you can go over the particulars with a professional to make sure that you’re aware of and comfortable with what will happen as a result of the bankruptcy case. 

There are signs that point towards the necessity or benefit of filing a Chapter 7 case that include the following: 

  • You have debts that are more than half of your annual income 
  • Your income is low or you have no disposable income 
  • You have a monthly income that’s below the median level for your state 
  • Your debt can’t be paid off in less than five years, regardless of taking extreme measures of hdsector.
  • The debt leads to debilitating stress in your life

What Occurs at the Start of a Chapter 7 Bankruptcy Case? 

The first thing that will happen is that the court will put an automatic temporary stay on current debts. This prevents creditors from taking one of several actions that include collecting payments, repossessing your property, and garnishing your wages. The court will take over your property and also appoint a trustee to help with your case. 

Your trustee will take a look over your assets and finances and provide oversight to your bankruptcy proceedings. They’ll be in charge of selling any nonexempt property you’re not allowed to keep, then put the funds towards paying back your creditors. They’ll arrange for you to have a meeting with your creditors that they’ll also manage, so you can answer questions regarding your filing. 

Some states will allow you to decide to use either the state’s exemption list or the federal exemptions. Fortunately, the majority of Chapter 7 bankruptcy cases are considered to be no asset cases. This means that all the individual’s property is exempt or that there is a valid lien against the property (a legal notice that is attached to the property due to having unpaid debt on it). 

After the proceedings (about four to six months after the end of the case), the court should discharge any debts that remain. This means that you won’t have to pay them at all. It’s crucial to note that some debts can’t be discharged, such as court fees, tax debts, and child support. No matter what comes of your case, this is sure to be a relief when you don’t have debt hanging over you. 

Why Work with an Experienced Bankruptcy Lawyer 

Bankruptcy can be a tricky matter and it’s often an overwhelming one. You don’t want to go into it without some support from a true professional. Your attorney can pinpoint what you need to gather for your case and then make sense of these documents to give you the best possible outcome for your Chapter 7 bankruptcy. Even though it’s not the most positive experience, you’ll gain some relief and peace of mind from the fact that your case is in good hands. Reach out today and find a competent and caring bankruptcy lawyer to assist you.