Etihad Airways PJSC and Hinduja Group have decided to halt talks for a potential investment in Jet Airways (India) Ltd. till clarity emerges on whether insolvency proceedings against the airline would be initiated, a senior official at State Bank of India told BloombergQuint on the condition of anonymity.
On Monday, two operational creditors of Jet Airways filed insolvency applications against the airline. According to the causelist at the Mumbai bench of the National Company Law Tribunal, Shaman Wheels Pvt. Ltd. and Gaggar Enterprises Pvt. Ltd. have filed insolvency proceedings against the debt-ridden airline. The tribunal adjourned the case on Monday and said that it will take a final call on the matter on Thursday.
If the insolvency proceedings are permitted, lenders will have to form a committee of creditors to find a suitable buyer for Jet Airways. If they fail to agree on a buyer, the lenders have the right to approach the tribunal for a liquidation proceeding against the company.
The two potential bidders are waiting to see if Jet Airways is admitted for insolvency proceedings, in which case, they will likely participate in the court approved bidding process, the banker quoted above said. This, the bidders feel, may allow them to invest at a better price, the banker said.
Mint newspaper first reported the development on Tuesday.
An Etihad spokesperson said the company does not comment on rumour or speculation. Hinduja Group didn’t immediately respond to emails sent on Tuesday.
In their earlier proposal to bankers, Etihad and Hinduja Group had expressed interest in picking up a minority stake in Jet Airways. They had asked lenders to find a majority investor and take a haircut of close to 80 percent haircut on the outstanding debt. Lenders however were not keen on taking such a large haircut for bidders to take minority control.
Jet Airways owes more than Rs 10,000 crore to its lenders, led by SBI. It had first defaulted on debt repayments on December 31, 2018, following which the lenders attempted to put together a revival plan for the airline. Six months and a round of failed bidding later, a resolution plan for Jet Airways is still to emerge.
In the meantime, Jet Airways remains grounded and a number of planes have been recalled by lessors. The airline has also lost some of its slots at airports across India. Top management officials at Jet Airways, too, have resigned from their positions.
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