Jet Airways lenders filed an appeal before the NCLAT against the Jalan-Kalrock Consortium’s resolution plans on Tuesday, January 24.
Lenders of Jet Airways have requested a stay of the National Company Law Tribunal’s (NCLT) approval of the sale of Jet Airways to the Jalan-Kalrock Consortium a few days after the NCLT issued its approval. On Monday, January 23, they contacted the NCLAT, saying that the winning bidder had not met certain previous conditions.
About 10 days after NCLT’s permission, the lenders appealed to the appellate bankruptcy court, asking for a delay on the transfer of the carrier’s ownership to JKC, according to two people with knowledge of the development who was quoted by Economic Times.
“The lenders want the plan to be circled back to the Committee of Creditors (CoC) for fresh consideration.”–Sources
The NCLT approved Jalan-Kalrock’s motion on January 13 to carry out its resolution plan for Jet Airways. Funding for the grounded airline’s resuscitation was allowed by NCLT.
“It goes without saying that the plan approved by this tribunal has to be implemented without any modification much less than on the satisfaction of any other undertaking. And thus, the effective date and completion date of the condition precedent under the plan shall have to be read as May 20, 2022.”–NCLT Order
It’s important to note that the Jalan-Kalrock Consortium is currently involved in a separate legal dispute over a Rs 250 billion payment to former Jet Airways employees as the lenders to the grounded carrier have filed the NCLAT at this time.
If a senior banker is to be believed, the resolution plan cannot be put into action unless the DGCA approves parking slots and the acquisition of planes. “If this approval does not come now, we don’t see how the company will start operations,” the person told ET.
Second, the majority of the lender payments are postponed. The company will pay the upfront sum, but the banker noted that if activities do not begin when we transfer the company to the successful bidder, they could not have the cash flow to pay the deferred amount.
In April 2019, Jet Airways ceased operations as a result of a financial issue. The airline thereafter went through an Insolvency and Bankruptcy Code (IBC) resolution process.
Jet’s CoC approved the revival plan that the consortium had filed in October 2020. In June 2021, the NCLT approved the strategy.
In October 2022, the consortium filed a petition with the tribunal asking for confirmation subject to the satisfaction of five requirements: the approval of the Air Operator Certificate, the submission of a business plan, the approval of slot allotment, the clearance of international traffic rights, and the demerger of the ground-handling company.
However, the lenders rejected the application and objected to the transfer of control, claiming that the prerequisite conditions had not been met.
The consortium suggested an overall infusion of Rs 1,375 crore as part of the rehabilitation plan, including Rs 900 crore for Capex and working capital. Additionally, Rs. 475 crores will be used to pay creditors’ claims.
A sticking point between the two parties has been an appellate tribunal ruling from last October regarding the payment of approximately Rs 200 crore in gratuity and provident funds to the airline’s former employees. The Supreme Court is now debating the matter.