Jet Airways relaunch to delay further due to unpaid payments

JET AIRWAYS A320

There are fresh clouds over the relaunch of Jet Airways. According to a report published by CNBC TV18, the Jalan-Kalrock consortium, which won the airline through the Insolvency and Bankruptcy Code (IBC) process, has not yet fulfilled its various payment obligations — and the deadline is just around the corner.

There are two deadlines which the Jalan-Kalrock consortium has to meet and as things stand, it looks to be in danger of missing both.

First, the consortium has to pay INR 52 crore to workmen and employees of the erstwhile airline by the end of business on November 11. Sources say that this payment has not been made as yet. The second deadline has to do with the payment of INR 185 crore to various lenders. The consortium has till November 16 to make this payment, and this has also not been made so far.

JET AIRWAYS
Jet Airways’ relaunch to delay further due to unpaid payments

ALSO READ – Lenders of Jet Airways threaten bankruptcy over aircraft rental revenues

The consortium had told the court that the effective date for its resolution plan would be May 20, 2022, and as per the resolution plan submitted by it, it had proposed to pay employees within 175 days, and lenders within 180 days from the effective date.

ALSO READ – Jet Airways to make the first tranche of payment to lenders

As reported earlier, the National Company Law Appellate Tribunal (NCLAT) of the Indian government has directed the Jalan-Kalrock consortium to clear unpaid provident funds (PF) and gratuity dues of its former employees. According to sources, this is what has caused the latest delays in the plans.

The Jalan-Kalrock consortium will get ownership of Jet Airways only after the first tranche of payments to lenders is made. So, if the consortium does not get a transfer of ownership, it cannot lease aircraft in the name of Jet Airways.

ALSO READ – Jet Airways hasn’t signed an aircraft leasing agreement yet

The Jalan-Kalrock consortium will get ownership of Jet Airways only after the first tranche of payments to lenders is made.

Also, any delays will mean that Jet Airways’ quick return to Indian skies is in jeopardy. The relaunch target has already been extended by the consortium multiple times, with the last target of October also being overshot.

ALSO READ – The planned relaunch of Jet Airways is further delayed till October

But that’s not the only cloud hanging over Jet Airways’ relaunch. The recent NCLAT order directed the consortium to pay provident fund and gratuity dues in full for all eligible employees until the commencement of insolvency — that’s till June 2019. Sources say this amount works out to over INR 200 crore. The resolution professional has not yet given the company, the final amount payable, and so this has not been paid so far.

Sources also say that the consortium has not deposited any of the INR 900 core it had committed towards CAPEX and working capital requirements either. So in all, against the proposals and the commitments, the consortium has to pay close to INR 237 crore – not including the statutory dues.

JET AIRWAYS A320
Jet Airways’ take-off in its new avatar looks quite uncertain.

So far, the consortium has not responded to queries on this matter. But as things stand, if the two deadlines pass by without payments being made, Jet Airways’ take-off in its new avatar looks quite uncertain.

ALSO READ – Jet Airways relaunch delayed due to unresolved negotiations between the administration & engine makers

Court setbacks for new owners of Jet Airways

The Punjab National Bank (PNB) enjoyed a legal victory last week after a tribunal increased the bank’s claims against Jet Airways by INR 2.01 billion (USD 24.5 million). India’s National Company Law Appellate Tribunal (NCLAT) allowed the increase on appeal after the bank had its claims slashed from INR 95.6 billion (USD 115.9 million) to INR 75.4 billion (USD 91.4 million) earlier in the airline’s restructuring process.

Tribunal chairman Justice Ashok Bhushan and member Barun Mitra ruled in the bank’s favour last week following a court earlier approving a restructuring plan put together by the Kalrock Capital-Murari Lal Jalan consortium which is attempting to complete a buyout and relaunch of the grounded airline. Until that happens, PNB retains a 26% shareholding in Jet Airways but the approved restructuring plan saw the bank take a big haircut on its claims.

ALSO READ – NCLAT urged by PNB to quash the rescue plans of Jet Airways

Court setbacks for new owners of Jet Airways

Separately, NCLAT also ordered the Jalan-Kalrock consortium to pay overdue employee pension fund and gratuity payments. Capping off an unsatisfactory week in court for him, Chhawchharia was ordered to make the payments within 30 days. The order was in response to petitions filed by several Jet Airways employee associations.

The Jalan-Kalrock consortium made several financial commitments to Jet Airways creditors, including banks and employees, to get their takeover proposal and restructuring plan approved. This happened despite the objections of five employee groups and three external creditors.

The approved restructuring plan proposed paying each out-of-pocket employee INR 23,000 (USD 279) despite some employees being owed up to INR 8.5 million (USD 103,000). The pension fund and gratuity payments are in addition to this.

The tribunal did not allow the employee’s claims for unpaid privileged leave entitlements and a bonus covering the period from April 2018 to June 2019. After numerous delays, there is still no firm date on when the consortium will finalise the takeover and relaunch of Jet Airways.

(With Inputs from CNBC TV18)

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