Around 1.43 lakh retail investors who bet on Jet Airways' revival are staring at a wipeout after the Supreme Court on November 7 ordered the liquidation of the company, rejecting the Jalan Kalrock consortium’s takeover bid of the grounded airline.
The Jet Airways stock, which was locked in a 5 percent lower circuit following the order, ended the day at Rs 34.04 on BSE.
The court set aside the National Company Law Appellate Tribunal (NCLAT) ruling that upheld the transfer of Jet to the Jalan-Kalrock Consortium (JKC) under an approved resolution plan, allowing an appeal by the State Bank of India (SBI) and other creditors. It said the consortium failed to infuse even the first tranche of money within the time stipulated in the resolution plan.
Retail shareholders (with invested capital of under Rs 2 lakh) held a 19.29 percent stake in Jet as of September 30. Other major shareholders include Punjab National Bank (26 percent), Etihad Airways (24 percent), and the erstwhile promoters (25 percent).
At the current market capitalisation of Rs 386.69 crore, retail shareholding in Jet is worth Rs 74.6 crore.
The airline has been grounded since 2019 but retail investors have continued to trade in the stock, betting on a revival despite the obvious threat of the company being delisted in the event of a successful insolvency resolution or liquidation.
According to 2023 reports, the Jalan Kalrock resolution plan included reducing public shareholding from 25 percent to 0.21 percent, which would have wiped out the market value of public shareholders but that didn’t seem to have deterred retail investors.
This year, on average, Rs 7.62 lakh worth of Jet shares have been traded daily, BSE data shows. The stock hit a high of Rs 63.15 on March 22 but has since lost 46 percent of its value.
With the top court ordering the liquidation, retail shareholders face a similar fate as those of DHFL whose shares were delisted and extinguished when the Piramal group took over the mortgage lenders business through an Insolvency and Bankruptcy Code process.
Jet insolvency saga
Jet Airways, once India's premier airline, faced severe financial challenges in the late 2010s, marked by mounting debt, rising operational costs and fierce competition from low-cost carriers.
By 2019, Jet Airways was struggling to operate and failed to pay its employees as well as vendors, leading to disruptions and loss of consumer confidence.
In April 2019, Jet Airways ceased operations as its debt exceeded Rs 7,500 crore. Soon, lenders led by the State Bank of India took the airline to the National Company Law Tribunal (NCLT) for insolvency proceedings, hoping to recover dues through a revival.
The process attracted interest from investors such as the consortium of Kalrock Capital and Murari Lal Jalan, who proposed a revival plan that got the NCLT’s nod in 2021.
However, the plan faced challenges, primarily due to disagreements over payment schedules with lenders and former employees as well as the consortium’s delays in fulfilling financial commitments.
By 2023, Jet’s hopes of revival had begun to fade, as the Kalrock-Jalan consortium struggled to meet financial obligations. Disputes between stakeholders and a lack of viable solutions to restore the airline’s operations led lenders to seek alternative measures.
The Supreme Court’s ruling puts an end to Jet Airways’ prolonged insolvency saga.
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