Jet Airways lenders are effectively forcing the airline into liquidation as they consider selling 11 aircraft while the resolution process remains slow, quoting sources, The Economic Times (ET) reported.
The Jalan-Kalrock consortium, the new owner of Jet, has failed to pay up forcing its lenders to re-evaluate their options, a year-and-a-half after the National Company Law Tribunal (NCLT) approved the airline’s resolution plan.
According to ET report, the source said that nobody thought the resolution would “take so long to execute”, adding that banks cannot transfer the company, till the money is received. “The way things are, it seems the execution will not happen soon. Meanwhile, the 11 planes we have in possession are also losing value. Maybe it is time to relook at selling those,” they stated.
A process in August got six expressions of interest (EoIs) from banks for the purchase of these planes. The interest has made some bankers believe they can make a recovery, albeit small.
“The Jalan-Kalrock consortium has filed an intervention application in the NCLT, which comes up for hearing on November 29. Banks will watch what they say to the court and act accordingly,” a second source pointed out.
Jet Airways was grounded in April 2019, after which its lenders took it to the NCLT.
According to the Jalan-Kalrock consortium’s resolution plan, the consortium proposed a total infusion of Rs 1,375 crore. This included Rs 900 crore towards capital expenditure and working capital, and Rs 475 crore to settle the claims of all creditors. The sum of Rs 475 crore includes Rs 380 crore to be paid to lenders, Rs 52 crore to employees and workmen, and the remaining towards other operational creditors.
Banks approved Jet Airways’ resolution plan in October 2020. It was then approved by the NCLT in June 2021.
According to the consortium’s submissions to the court, banks are to blame for the delay. A plan B is being prepared to close the case even if it means liquidation if the consortium continues the argument at the next hearing, the report added.
Meanwhile, Jet Airways has announced that it will cut salaries for various staff and send many employees on leave without pay, amid uncertainty over resumption of its operations.
The measures, which will be effective from December 1, were revealed hours after the Jalan-Kalrock consortium said it might take “difficult” near-term decisions to manage cashflows.