The National Credit Guarantee Trustee Co Ltd has released ₹301 crore to Bank of Baroda (BoB) as part of the bank’s claim related to loans given to the now-defunct Go First Airlines. This transaction, conducted under the Emergency Credit Line Guarantee Scheme (ECLGS), represents the first recovery by any lender from the bankrupt airline. Sources familiar with the matter disclosed this information.
Background on Loan Recovery
The release of funds occurs amidst ongoing discussions among lenders about liquidating the airline. Negotiations with two prospective bidders had stalled, prompting this action. Bank of Baroda, one of the three primary financial creditors to the airline, had extended nearly ₹550 crore under the post-Covid-19 scheme. This scheme, guaranteed by the government, was designed to assist various sectors and micro, small, and medium enterprises facing liquidity crises due to the pandemic.
Initiation of Government Guarantee
Bank of Baroda had invoked the government guarantee earlier this year, following the initiation of bankruptcy proceedings in May of the previous year. According to an anonymous source, the funds were received at the end of last month. This marks the first recovery by any creditor from Go First Airlines. The released amount represents a portion of the total claim, with additional funds expected pending the completion of due processes.
Impact on Other Lenders
Bank of Baroda’s successful recovery could pave the way for other creditors, such as Central Bank of India and IDBI Bank, to claim their dues through a similar government guarantee process. Both banks have initiated claims to recover their respective dues. According to another insider, BoB’s success will facilitate the recovery efforts of these institutions as well.
Airline’s Status
Go First Airlines has been grounded for over a year due to the absence of a viable revival plan.
