Jet Airways, led by the new management, has for the time being averted liquidation proceedings by agreeing to transfer to banks about INR 130 crore received from the lease-rentals of Air Serbia planes, according to a recent report by The Economic Times.
Jet Airways owes a lot of cash to many lenders and stakeholders, including ex-employees and ticket claimants. So, any source of revenue for the airline is being carefully observed, with attempts being made to direct the funds to those demanding their money back.
Aircraft rentals to Air Serbia have, so far, yielded about INR 108 crore. The amount is parked with the SBI. The report said the banks conveyed to the winning bidder that they would apply for liquidation if lease rentals were not distributed to the verified lenders.
However, the Jalan-Kalrock Consortium, which has won the bid to acquire the company under the Insolvency and Bankruptcy Code (IBC), cannot place an order to buy aircraft until it obtains a no-objection certificate from its lenders.
According to the report, the lenders said they would give a NOC only after the consortium commits to a timeline for implementing the debt resolution plan, which involves staggered payment to gain ownership of the airlines.
The consortium has offered payments of INR 380 crore in instalments and a 9.5% stake in the airline company to the lenders. The National Company Law Tribunal (NCLT) had approved its plan in June 2021, but the consortium has not yet paid the lenders, the people said.
Executives at the consortium denied facing any restrictions to going ahead with its plans. “This is absolutely incorrect, and the NCLT process does not restrict us,” said a spokesman for the consortium.
“Liabilities and timelines for the payment of liabilities of past lenders are fixed and have no relation to the new business which Jet Airways does, including placing an aircraft order. The intent of the IBC is to revive businesses and not restrict or liquidate them. A successful resolution applicant, that is Jalan-Kalrock Consortium, is free to make operational decisions or acquire new assets for the company’s revival, as per its business plan/needs and requirements.”Spokesperson, Jalan-Kalrock Consortium
The consortium includes Murari Lal Jalan, an NRI based in the UAE, who will hold shares of Jet in his personal capacity, and Florian Fritsch, who would hold shares through his investment holding company – Kalrock Capital Partners, Cayman.
Jalan’s business interests are spread over the UAE, Brazil, India, Uzbekistan and the Philippines, according to the resolution plan.
“All the decisions are taken in consultation with a monitoring committee which has representatives from Jet’s lenders too. They have approved the leasing of aircraft to start operations afresh. There is no reason why they won’t say yes to purchase too,” said a person from the Jalan-Kalrock camp.
Lenders’ recovery equates to just 5% of their claims, thus limiting the downside if the company is liquidated.
The resolution professional, Ashish Chhawchha backed by Grant Thornton, has admitted INR 7,453 crore in claims from verified creditors.
Civil aviation regulator Directorate General of Civil Aviation (DGCA) reinstated Jet’s air operators’ certificate in May 20222. Jet Airways was grounded in April 2019 due to its failure to pay for fuel and lease rentals.
Jet Airways has been in superior spherical talks with airplane makers Airbus and Boeing to buy planes. Executives at each firm stated the talks had gone slower in the previous few weeks after the lenders raised points. In the meantime, the airline plans to start operations in September with leased planes.
(With Inputs from The Economic Times)