Kingfisher Airlines has been issued with a show cause notice by the India's directorate general of civil aviation (DGCA), to which the carrier has to explain why its air operator's certificate should not be suspended or cancelled.
The airline, which stopped operations on 1 October after some of its employees went on strike, must also prove that it is able to resume operations and sustain them under the notice.
"We have received a show cause notice from the DGCA, which we have to reply to within 15 days. We will send a detailed response to the DGCA well in time," says the airline's vice-president for corporate communications Prakash Mirpuri.
"We will also submit a comprehensive plan for restoration of services after negotiations with our employees."
Indian civil aviation minister Ajit Singh said on Sunday that the airline must submit a "concrete plan" on how it plans to clear its debt and resume operations safely. "It cannot just say that funds will come from here and there," Singh told journalists, according to Indian news reports.
The airline grounded its fleet and stopped operations on 1 October after several employees, some of whom were said to have not been paid for months, went on strike.