For the Kalrock Capital- Murari Lal Jalan combine, there is a new deadline to comply with in their pursuit of Jet Airways. And, that is the November 3 deadline to submit a performance security bond that could amount to Rs 150 crore.
There was a buzz over the weekend that the consortium, which was declared the preferred bidder on October 17, may have missed the deadline. But sources in the know clarified that it was not so.
"The consortium was officially intimated by the resolution professional on October 22, and will get seven working days to furnish the performance security," said an official tracking the Jet Airways insolvency process. By that count, the deadline will be November 3.
The bond was part of an amendment that was brought in under the Insolvency and Bankruptcy Code in early 2019, to ensure that the winning bidder doesn't withdraw its plan later.
If the resolution applicant, here the Kalrock-Jalan combine, fails to implement its plan, it will forfeit the performance security.
Moneycontrol has reached out to resolution professional Ashish Chhawchharia, and will update the story once he responds.
The change was prompted by a couple of insolvency processes where the winning bidder refused to furnish the bond. In the insolvency process of ARGL, a unit of Amtek Auto, Liberty House had refused to pay the performance bond, after which the National Company Law Tribunal (NCLT) asked the UK company to withdraw its offer.
Industry executives point out that even if an applicant doesn't meet the deadline, then it is up to the Committee of Creditors, consisting of the lenders, to extend the deadline if there is a need. "In some cases we have seen the winning resolution applicant getting 15 days to submit the performance security," said a Mumbai-based lawyer who didn't want to be named.
In the case of Jet Airways, the winning resolution plan may be submitted to the NCLT once the performance security is deposited by the Kalrock-Jalan combine. The consortium had polled about 90 percent of the lenders' votes for its plan, in its race against the FSCT-Imperial Capital combine.
Just as the search for a new owner took 16 months, the path of restarting the airline's operations may also turn out to be a long one.
Once the NCLT approves the plan, the new owners will have to approach the Ministry of Civil Aviation and industry regulator DGCA for multiple clearances. These range from getting back the air operator certificate that at present is suspended, to the slots at the airport that it needs to land and take off flights.