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Jet Airways saga: RP rejects JetLite employee claims, raises question on IBC

RP has not accepted the claims as JetLite is a separate entity from Jet Airways

July 04, 2019 / 08:25 PM IST

The Jet Airways insolvency has brought to fore an issue that the Insolvency and Bankruptcy Code may not have addressed till now.

As a part of the insolvency process, the Jet Airways resolution professional called for claims to be filed. Those being called to file also included Jet Airways employees.

The HR department of the airline is said to be collating information, of the present and former employees, and will submit the claims by July 4.

The airline did not pay salaries to its employees since March. And, since it had suspended its operations on April 17, about half of Jet Airways' employee strength of 20,000, left the airline. The total unpaid wage bill is said to be about Rs 3,000 crore.

But, it has emerged that claims filed by employees of JetLite, the low-cost unit of Jet Airways, have been rejected by the resolution professional, Ashish Chhawchharia.

"When our colleagues approached the RP (resolution professional), their claims were not accepted. JetLite had 14 aircraft, where are they? What will its 2,000 employees do?" asked an executive from the company.

JetLite was formerly Air Sahara, which was bought by Jet Airways in 2007. Consequently, it operated as a budget carrier. JetLite remained a separate entity, and its brand was Jet Konnect. It was a part of the Jet Airways “group”.

And, that is probably the reason why claims of JetLite employees have not been entertained.

"JetLite is a separate entity. And, thus, it is outside the jurisdiction. If both the companies were part of the process, the claims could be accepted. But, the insolvency proceeding is only against Jet Airways," resolution professional Ashish Chhawchharia told Moneycontrol.

Curiously though, this did not prevent JetLite aircraft and slots to be taken away. According to the website of industry regulator DGCA, at least four of JetLite aircraft have been de-registered. Once de-registered, the planes can be taken out of the country and leased to other airlines.

JetLite employees are said to be looking into the matter, and may meet the RP on July 4. "We should get some clarity on the matter. Legal advice is needed in the matter. IBC is a new regulation, and not too many understand the provisions," said a senior executive.

All may not be lost for the employees of JetLite. Their claims may be accepted if agreed to by the lenders. The employees could also move the NCLT, which could admit their submission.

A better clarity will emerge on July 5 when the next hearing is slated.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Jul 4, 2019 11:33 am