The Mumbai bench of the National Company Law Tribunal (NCLT) on Tuesday adjourned the Jet Airways insolvency matter to 6 December. This came as the parties sought some more time from the tribunal to file their responses in the matter.
An interim application was filed by the successful resolution applicant Jalan-Kalrock consortium before the NCLT seeking implementation of the resolution plan submitted by them in an attempt to transfer ownership of the airline.
On 22 June 2021, the tribunal in its order had approved the resolution plan submitted by the Jalan-Kalrock consortium subject to necessary approvals. The consortium consists of UAE-based non-resident Indian Murari Lal Jalan who will hold shares in Jet Airways in his personal capacity and Florian Fritsch who will hold shares through his investment holding company Kalrock Capital Partners Ltd, Cayman. However, the lenders and resolution applicants have been at loggerheads in terms of the implementation of the resolution plan.
Currently, some lenders from the committee of creditors said that the consortium was not complying with all the conditions precedent in the resolution plan, said a counsel privy to the matter. While on the other hand the resolution applicant said that it has complied with all the condition laid in the plan, he said.
Senior counsel, Krishnendu Datta, on behalf of the resolution applicant informed the bench that they had received the lenders’ reply in the matter on 25 Nov. He added that a rejoinder was already in the works and would be filed by the counsel by 30 Nov. Dutta sought time to respond to the application and requested for an adjournment.
The airline suspended operations on April 17, 2019 due to financial distress and has been undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC) for two years. Following which SBI led a consortium of lenders in taking the airline to the dedicated bankruptcy court to initiate corporate insolvency resolution process against the company.
Apart from the creditors, various associations of Jet Airways too had challenged the resolution plan. Similarly, one of its financial creditors PNB had filed a plea before the NCLAT challenging the passing of resolution plan for the beleaguered airlines on the grounds of irregularity and contravention of law. At ₹380 crore, the lenders took a steep haircut on their admitted claims of over ₹7,807.7 crore under the approved resolution plan.
As per a recent order by appellate tribunal NCLAT, the consortium has also been asked to clear pending provident fund and gratuity dues of Jet’s staff. This is expected to be about ₹250 crore. However, the consortium has not clarified so far on whether it will pay this amount.
The NCLT hearing is expected to provide clarity on whether ownership can be transferred on the basis of bank guarantees worth ₹150 crore. This is the bone of contention between the airline’s winning bidder Jalan-Kalrock Consortium and financial creditors. The resolution plan stated that the winning bidder has to make an upfront payment of ₹185 crore to the financial creditors within 180 days from the effective date. The consortium has deposited bank guarantees worth ₹150 crore, and has said that it will invest further only after the next steps of the resolution plan are fulfilled in terms of handover of the company.
The consortium has also restructured salaries for some employees to secure cash flows. One-third of the total workforce of around 230-250 employees is set to be impacted from December and many of the affected staff will be on temporary pay reduction of up to 50%. Around 10% of the employee strength will be on leave without pay for a temporary period. The management has not clarified till when the new measures will remain in place. It is also not clear whether the airline will hire more people for now.