Jet Airways case: NCLAT reserves orders in Jalan Kalrock’s plea seeking time to make payments

Jet Airways case

The National Company Law Appellate Tribunal (NCLAT) on August 21 reserved orders in Jalan Kalrock Consortium's application seeking extension of time till September 30 to pay Rs 350 crore.

Jalan Kalrock Consortium, which is the successful resolution applicant of grounded airlines told the court that they would deposit Rs 100 crore by August 31 and another Rs 100 crore by September 30. The consortium urged the Committee of Creditors (CoC) to encash a performance bank guarantee (PBG) of Rs 150 crore towards the remaining amount.

The CoC had however objected to encashing the bank guarantee.

During the hearing, the consortium argued they had the powers to modify the terms of the Request for Resolution Plan (RFRP) to ensure that the performance bank guarantee is adjusted towards the payment of Rs 350 crore. Represented by senior advocate Ravi Shankar Prasad, the consortium argued that CoC must also commence regulatory processes to enable transfer of Jet Airways' ownership to them. The consortium told the appellate tribunal that they are committed to recommencing Jet Airways.

The Committee of Creditors (CoC) of grounded airline argued that by seeking an extension of time to pay Rs 350 crore that they had demanded, Jalan Kalrock Consortium (JKC) is trying to modify the approved resolution plan.

Jalan Kalrock consortium is the successful resolution applicant of Jet Airways.

The lenders argued that while their claim against the grounded airline is close to Rs 8000 crore, the consortium is now finding it difficult to pay them Rs 350 crore. According to the lenders Rs 175 crore of the Rs 350 crore will be utilised to pay the airline's dues at the airport, while the other half will be utilized by the lenders towards the dues the airline owes them.

Represented by Additional Solicitor General Venkatraman, the CoC argued that the performance bank guarantee was a back up and cannot be utilised at this stage. He told the appellate tribunal that while they may consider extension of time till September 30 for the deposit of Rs. 350 crore, they are objecting to the bank guarantee being encashed.

On August 18, when the consortium proposed the payment schedule, the appellate tribunal asked it to file an application to this effect in 24 hours.

On August 7, the CoC told the appellate tribunal that they may choose not to pursue the appeal against the transfer of the airline's ownership to Jalan Kalrock Consortium if it pays Rs 350 crore towards fulfilling condition precedents.

On July 10, the CoC told the Supreme Court the airline be wound up as the resolution plan approved by the NCLT was not workable.

A committee of creditors is formed once a company is admitted to insolvency. It is a body of financial creditors that represents the interest of stakeholders. The voting percentage in the panel is proportional to the amount a financial institution has lent to the company in insolvency.

On January 13, NCLT allowed the transfer of the beleaguered airline to the consortium led by London-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan. However, the CoC took it to NCLAT opposing the transfer.

Jet Airways was grounded in April 2019 over growing losses and a debt of about Rs 8,000 crore. In October 2020, the airline's CoC approved the revival plan submitted by the Jalan-Kalrock consortium.