MUMBAI Lenders to India's Go First have decided to liquidate the company's assets after rejecting bids by interested suitors to revive the bankrupt airline, two banking sources said.

Go First, which filed for bankruptcy in May last year, had received two financial bids under the bankruptcy process.

The Committee of Creditors has voted in favour of liquidating the airline, the bankers said.

Liquidation "is the best way forward" and "it makes no sense to keep pumping in more money" to cover costs related to the insolvency process, one of the bankers said.

Emails seeking comments to Go First's resolution professional, who conducts the bankruptcy process, did not immediately get a response.

The bankers did not wish to be identified because they were not authorised to speak with the media.

Reuters had earlier reported that one of the two bidders had raised its offer after a push by lenders.

"Bidders were given adequate time to review and raise their bids, but even that fell short of lenders' expectations," the first banker said.

The liquidation process will commence once all legal formalities are completed, the second banker said.

Go First owes a total of 65.21 billion rupees (US$781.14 million or RM3.5 billion) to its creditors, which include Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank.

Foreign aircraft lessors of Go First were locked in a tussle with the company after they were blocked from repossessing planes due to a moratorium imposed by Indian courts. However, a local court, in April, allowed lessors to take back their planes.

"The court order was a major deterrent for bidders as there was no value left in the airline," the second banker said.

  - Reuters