Frustrated lenders are effectively forcing Jet Airways into liquidation as they consider selling 11 aircraft while the resolution process remains slow, sources told The Economic Times.
A year-and-a-half after the National Company Law Tribunal (NCLT) approved Jet Airways’ resolution plan, the Jalan-Kalrock consortium has failed to pay up forcing lenders to re-evaluate their options, bankers told the paper.
The source said that nobody thought the resolution would “take so long to execute”, adding that banks cannot transfer the company, till the money is received. “The way things are, it seems the execution will not happen soon. Meanwhile, the 11 planes we have in possession are also losing value. Maybe it is time to relook at selling those,” they stated.
A process in August got six expressions of interest (EoIs) from banks for the purchase of these planes. The interest has made some bankers believe they can make a recovery, albeit small.
“The Jalan-Kalrock consortium has filed an intervention application in the NCLT, which comes up for hearing on November 29. Banks will watch what they say to the court and act accordingly,” a second source noted.
Jet Airways was grounded in April 2019, after which its lenders took it to the NCLT. Per the Jalan-Kalrock consortium’s resolution plan, the consortium proposed a total infusion of INR 1,375 crore. This included INR 900 crore towards capital expenditure and working capital and INR 475 crore to settle the claims of all creditors. The sum of INR 475 crore includes INR 380 crore to be paid to lenders, INR 52 crore to employees and workmen, and the remaining towards other operational creditors. Banks approved Jet Airways’ resolution plan in October 2020. It was then approved by the NCLT in June 2021.
According to the consortium’s submissions to the court, banks are to blame for the delay. A plan B is being prepared to close the case even if it means liquidation if the consortium continues the argument at the next hearing, the report added.
The State Bank of India-led lenders’ consortium had earlier said it would give a NOC only after the new owners commit to a timeline for implementing the debt resolution plan, which involves a staggering payout. Until this is provided, Jet Airways’ ownership cannot be transferred to the consortium.
The tribunal is likely to take up the plea on November 29, which the banks will watch and act accordingly, the ET report said. The court had asked erstwhile resolution professional Ashish Chhawchharia to compute these payments within a month and communicate the same to the consortium.
Since the takeover of the airline was facilitated by waiving two preconditions, the trust deficit has increased, according to bankers. “Though these were preconditions for the plan implementation, banks had agreed to not oppose it in court if the consortium sought relief. But instead, Jalan-Kalrock has started blaming banks for the delay, which has raised doubts on their intentions,” the first source added.
Earlier, Jet Airways temporarily docked the salaries of some of its staff by up to 50% and sent some on leave without pay. Sources in the know added that the changes are effective December 1.
One individual aware of the ongoing discussions said that almost half the staff is not impacted by these changes. “Even Sanjiv Kapoor (Jet Airways CEO) has agreed to take a substantial pay cut,” the individual said. On November 18, Jet Airways sent 60% of its employees, including senior managers, on leave without pay.
(with inputs from The EconomicTimes)