NCLT approves Kalrock-Jalan consortium’s plan to take over Jet Airways: What we know so far

Jet Airways was grounded in April 2019 due to lack of funds and insolvency proceedings against it began in June of the same year.

The National Company Law Tribunal (NCLT), on June 22, gave the go ahead for the resolution put in by the Kalrock-Jalan consortium to take over the defunct airline, Jet Airways, two people aware of the development said.

At the same time, the court has ruled that the landing slots allotted to Jet Airways earlier will not be immediately available to the airline. The Directorate General of Civil Aviation (DGCA) will have 90 days to take a call on airport slots for Jet Airways.

“The tribunal has made it clear that slots cannot be claimed on the basis of historicity. The consortium will have 90 days to get all approvals in place,” said one of the people quoted above on condition of anonymity.

According to details available on Jet Airways’s website, as on October 3, 2020, financial creditors had claimed Rs 11,344.71 crore from the company, of which claims worth Rs 7,453.63 crore were admitted by the resolution professional.

The airline’s employees had filed claims worth Rs 569.21 crore, of which claims worth Rs 359.29 crore were admitted. Claims filed by operational creditors other than employees were to the tune of Rs 28,466.13 crore, of which Rs 6,658.37 crore were admitted. State Bank of India (SBI) is the largest financial creditor to Jet Airways, with admitted claims worth Rs 1,138.85 crore.

The Kalrock-Jalan consortium said in a statement that its team will study the written order once issued by the NCLT and provide a detailed response on the next steps subsequently. "The Consortium maintains its stand that it wants to work alongside the Ministry of Civil Aviation, the Directorate General of Civil Aviation and all its competitors to put Jet Airways back in the skies," the Kalrock-Jalan consortium said.

With the approval of the resolution plan by the NCLT, its implementation has started and the obligations towards payments and other matters have come into effect, said Ashish Pyasi, Associate Partner, Dhir & Dhir Associates.

“The payment to lenders will also start in accordance with the resolution plan so approved. The details are not yet out, but the resolution may see some road blocks if there is either a challenge to the order or the necessary approvals are delayed,” Pyasi said. In that case, the implementation of the resolution plan will be affected.

Jet Airways was grounded in April 2019 due to lack of funds and insolvency proceedings against it began in June of the same year. After several rounds of bidding, the consortium of Kalrock Capital and Murari Lal Jalan’s bid was selected as the successful bidder for the airline by its lenders in October 2020.

The bid is said to have offered a payout of Rs 850 crore to the lenders, led by SBI, and also includes equity in the airline to the banks, Moneycontrol reported in October 2020.

Some legal experts took the view that the 22 June order puts the ball firmly in the DGCA's court. "This makes it a bit tricky because just a few days back the Ministry of Civil Aviation had indicated that the landing slots are assets of the airport operator and not that of any airline," said Nirav Shah, Partner, DSK Legal. Considering this position of the Ministry of Civil Aviation, it will be interesting to see what the DGCA does, Shah added.