Wind up Jet Airways, resolution plan not working, creditors tell SC

Seeking Jalan Kalrock's response, the court has listed the next hearing in two weeks.

Jet Airways creditors have called for the grounded airline to be wound up, telling the Supreme Court on July 10 that the resolution plan approved by the National Company Law Tribunal (NCLT) was not workable.

Appearing for the Committee of Creditors (CoC), additional solicitor general N Venkatraman told the apex court that Jalan Kalrock Consortium, which was given the ownership of the airline, had not infused any funds into the company.

The Director General of Civil Aviation was not ready to renew the airline's Air Operator's Certificate, which expired in May, he said.

The consortium had not met its funds infusion target but was getting repeated extensions from tribunals. The company would have to go into liquidation if CoC were to recover any of its dues, Venkatraman said.

The Jalan Kalrock Consortium in a response to questions sent by Moneycontrol said that it’s “resolution plan provides for fund infusion to start only after the Effective Date and due to the challenges made on the effective date there have been delays in implementing the resolution plan.”

“JKC shall not do anything or has done which is contrary to the NCLT approved resolution plan and is fully committed in reviving Jet Airways,” the association said in a statement.

It added that it has “invested approximately Rs 300 crore in the entire process which also includes Rs 20 Crores in Jet Airways directly till date.”

Seeking Jalan Kalrock's response, the court has listed the next hearing in two weeks.

A CoC 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 committee is proportional to the amount a financial institution has lent to the company in insolvency.

In the Jet case, the committee is led by by State Bank of India, which along with Punjab National Bank, IDBI, Canara Bank, ICICI Bank and others, are owed Rs 8,000 crore.

On July 5, the CoC told the court it had spent Rs 470 crore since the implementation of the Corporate Insolvency Resolution Process (CIRP), without getting any return on investment. The creditors said they were incurring Rs 23 crore in expenses every month.

The Jet Airways Workmen Association agreed with the CoC and told the court they had not been paid their dues.

In May 2023, the National Company Law Appellate Tribunal (NCLAT) granted Jalan Kalrock Consortium, which emerged as a successful bidder to take over Jet Airways, more time to make payments to the State Bank of India (SBI).

It said while the National Company Law Tribunal (NCLT) approved the transfer to Jalan Kalrock in January, the decision was challenged in NCLAT, which ruled in favour of the consortium in March 3, 2023.

Hence, Jalan Kalrock was entitled to exclude November 16, 2022, to March 3, 2023 period, during which the ownership hearing was on, to comply with the payment deadline.

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.

It also asked the consortium to make payments by May 15, 2023, 150 days from the initiation of the ownership proceedings but the NCLAT exemption gave it more time.

The consortium was to make the first tranche of the payment to Jet's lenders before May 15 but it didn't.

The lenders approached the NCLAT, opposing the ownership transfer, saying the consortium had not fulfilled its obligations.

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 Committee of Creditors (CoC) approved the revival plan submitted by the Jalan-Kalrock consortium.