The dedicated bankruptcy court is set to pronounce its ruling on the Kalrock Capital and entrepreneur Murari Lal Jalan Consortium’s resolution plan for the defunct airline Jet Airways Ltd.
The Mumbai bench of the National Company Law Tribunal presided by judicial members – Janab Mohammed Ajmal and V Nallasenapathy had reserved its order after hearing all parties, including the successful resolution applicant, lenders, DGCA and others.
As per the resolution plan, the successful bidder has proposed a total cash flow of Rs 1375 crore for the revival of the company. The revival plan envisages starting operation with 30 aircraft within six months from the approval of the plan by NCLT.
Naresh Goyal founded Jet Airways over 25 years ago. The airline stopped flying on April 17, failing to raise money to keep itself afloat and was admitted for the resolution process in June 2019.
While the bankruptcy court was hearing a revival plan submitted by the Kalrock-Jalan consortium, they had also sought clarification from the Ministry of Civil Aviation and the Directorate General of Civil Aviation (DGCA) about the availability of the slots to the company based on historicity.
Subsequently, the tribunal had also directed the government to inform the NCLT about Jet Airways’ erstwhile slots.
In October last year, the defunct airline’s committee of creditors approved a resolution plan submitted by a consortium of asset management firm Kalrock Capital and entrepreneur Murari Lal Jalan.
The government had clarified in response to the tribunal that, “These slots are not the assets of the corporate operator and for any airline, they are merely permissions, which remain with the airline subject to fulfilment of certain requirements.” Also, MoCA and DGCA said, “Further, bilateral rights are national assets and not the asset of any airline that uses them and is to be optimally utilised at all times. Given the said factual position, the same can’t be claimed as a matter of right.”
“After clearing the way up to the approval of the plan by committee, now the issue of allotment of slots based on historicity is going to be the main contention in the resolution of Jet airways,” said Ashish Pyasi Associate Partner Dhir & Dhir Associates. “There are conflicting stands taken by DGCA and the Ministry on one side and resolution professional and applicant on the other side on the issue of slots allocation.”
The company had received a claim of about Rs 24,8879 crore, out of which Rs 8,462 crore were admitted by the resolution professional of the company.
As per the plan, employees will get Rs 113 crore against their claim of over Rs 1,200 crore in 180 days, while financial creditors will get Rs 1,010 crore against their claims of Rs 7,454 crore in tranches in five years.
According to the plan, the Kalrock-Jalan consortium will hold 89.79% in the airline; the assenting financial creditors will hold 9.50%. Earlier promoters Naresh Goyal’s shareholding of 51% and Etihad’s 24% come to zero, while public shareholding decreases from 25% to 0.21%.
Ashish K Singh, the managing partner of law firm Capstone Legal, said there is wide discretion available to NCLT in reaching its decision on the Resolution Plan. The explanation to Section 30 provides that distribution between creditors should be fair and equitable. “The Tribunal is required to see whether the provisions of the IBC and regulations have been met. It is not required to supersede the commercial wisdom of the majority of the Committee of Creditors,” said Singh.
Senior Counsel Gaurav Joshi and an advocate Rohan Rajadhyaksha appeared for the resolution professional. At the same time, Senior Advocate Ravi Kadam appeared for the successful bidder.
