Jet Airways Insolvency: Winding Up Sole Option, Creditors Tell Supreme Court
CoC tells the top court that the Jalan-Kalrock Consortium has not infused a rupee since the resolution plan was approved in 2021.
The resolution plan that was approved in June 2021 is becoming unworkable in June 2023, and the only option now is to wind up the company, Jet Airways Ltd.'s Committee of Creditors informed the Supreme Court.
Not a rupee has been infused till now by the successful bidder, and the CoC has spent over Rs 400 crore of public money, Additional Solicitor General N Venkataraman told the apex court on Monday.
Venkataraman said the Jalan-Kalrock Consortium keeps filing extension pleas for an infusion of funds, but it has not deposited any money yet.
The airline's air operations certificate expired in May, and the Directorate General of Civil Aviation is not inclined to renew it, Venkataraman said.
Seeking a reply from the consortium, Chief Justice of India DY Chandrachud has listed the case after two weeks for a hearing.
Jet Airways went into insolvency after facing a severe funding crunch in 2019. The resolution plan submitted by the consortium of Murari Lal Jalan, a non-resident Indian, and Florian Fritsch of Kalrock Capital Partners Ltd. was approved two years later, in June 2021.
The Jalan-Kalrock consortium had 150 days from Nov. 16, 2022, to May 15, 2023, to pay their dues of Rs 150 crore to State Bank of India, which is part of the monitoring committee responsible for the smooth running of the grounded Jet Airways' resolution plan.
When the payment of dues was not done in time, the consortium approached the National Company Law Appellate Tribunal to restrain SBI from encashing the performance bank guarantees.
In May, the NCLAT observed that the JKC was still in the process of implementing the resolution plan, and while SBI can invoke the performance bank guarantee, it cannot do so until the plan fails.
Subsequently, the appellate tribunal granted an extra three months to the consortium to pay the dues to the bank.
In a media statement, JKC’s spokesperson said that the consortium can only infuse funds at the right time, once all prerequisite steps are complete according to the approved resolution plan. These steps include confirmation of effective date of the resolution plan, making the company compliant under various regulations, etc.
In response to the CoC's submissions on expiration of the air operations certificate, JKC said that the certificate could not be kept active due to delays caused by the lenders. If the lenders had agreed on the effective date in May 2022 and handed over the company, the certificate would have been kept valid, it said.
"DGCA has never said they are not willing to extend the AOC. In fact, they are reviewing the matter as we speak, and we expect their full support as we have been getting all this while," the statement said.
