The development caps an unhappy and debilitating period for Jet Airways, its management and stakeholders.
The consortium of lenders led by State Bank of India has decided to take the grounded Jet Airways to bankruptcy courts after failing to stitch together a revival plan, despite working on it for over five months. The development caps an unhappy and debilitating period for Jet Airways, its management and stakeholders.
Lenders decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC. The airline stopped operations on April 17 burdened with outstanding loans of Rs 8,500 crore and liabilities worth over Rs 15,000 crore. In the past few weeks, lenders have held talks with potential investors like Etihad and the Hinduja Group to revive the airline, but there was no formal proposal.
As per reports, Etihad and the Hinduja Group, the two interested bidders, were demanding over 85 percent haircut on Jet Airways’ debt which was unacceptable to lenders. Bankers are hoping that new bidders could be attracted under the bankruptcy process to join Hinduja’s and Etihad as bidders can avoid open offers for cases under this process.
Sources have also told moneycontrol that the consortium has selected Ashish Chhawchharia of advisory firm Grant Thornton for the crucial role of interim resolution professional. The interim resolution professional will have to find a solution which keeps the interests of lenders, employees and customers in mind.
Under the norms, the interim resolution professional has 270 days to find a suitable resolution for the stressed account. A resolution plan for the revival of the company needs to be approved within 180 days by creditors holding 75 percent of the financial debt. NCLT can extend this by another 90 days. If a plan is approved, it is adopted and becomes binding on all “stakeholders” involved in the process. If no resolution plan is approved in this period, the NCLT is required to order the liquidation of the corporate debtor.
Nevertheless, all eyes are now on The National Company Law Tribunal. From this point on and until the end of the corporate insolvency resolution process, the erstwhile management ceases to have any control over the affairs of the company.To find out more about these hacks, watch the video by Sakshi Batra.
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