Shares of Wadia group company Bombay Burmah Trading Corp Ltd. dropped more than 6 percent in early trade on Wednesday after Go First airline, filed for voluntary insolvency resolution proceedings before National Company Law Tribunal (NCLT) Delhi.

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Bombay Burmah Trading Corp informed bourses that Go Airlines(India) Ltd, which operates Go First airline, has filed a Suo Moto application

for initiation of resolution proceedings under Section 10 of Insolvency and Bankruptcy Code, 2016(Code) before NCLT Delhi.

The Wadia group company holds a 32.61 percent stake in Go First.

Bombay Burmah, through its subsidiary Baymanco Investments Ltd, had infused around Rs 210 crore into cash strapped Go First in the December quarter through an issue of compulsory convertible prefrence shares (CCPS).

The CCPS will be converted into equity shares after five years from the date of allotment.

Also, the Wadia group in 2021 had infused around Rs 2,000 crore into Go First in equity and bridge loan ahead of its planned IPO.

The effect of such filing on the financial statements for the year ended 31 March 2023, as a post-period event, would be assessed and reported in due course, Bombay Burmah stated.

Budget airline Go First is facing a cash crunch and is unable to meet its financial obligations as more than half of its fleet (28 aircraft) is grounded due to the non-availability of Pratt & Whitney engines.

Also Read: Go First's financial troubles put banks at risk; lenders' exposure details here

Go First has also cancelled flights until May 5 and promised to make refunds to customers. The airline operates around 185 flights daily.

According to the airline, its liabilities currently stand at over Rs 11,000 crore.

Go First in a statement mentioned that it was been forced to seek debt resolution proceedings due to a "serial failure" of Pratt & Whitney engines, resulting in the grounding of 50 percent of the fleet. The airline is no longer in a position to continue to meet its financial obligations.

Shares of Bombay Burmah are down 5.2 percent to Rs 986.90.

Also read: Aviation regulator DGCA issues show cause notice to Go First | Top developments

(Edited by : Rukmani Krishna)