Jalan-Kalrock consortium gets 108 more days to infuse capital into Jet Airways

The Lenders and successful resolution applicant (SRA) should work in coordinated manner for revival of Jet Airways, so as to start its operations at an early date, the National Company Law Appellate Tribunal (NCLAT) said, while giving the consortium of Murari Lal Jalan and Kalrock Capital (SRA) three more months to infuse capital in airline. The appellate tribunal also directed the monitory committee lenders to not invoke the performance bank guarantee given by the bidder of Jet Airways.

“After considering the facts and sequence of events in the present case, we are of the view that SRA is entitled for exclusion of period from 16 November 2022 till 3 March 2023, when this tribunal in the present appeal passed an order declining the interim relief as prayed by the monitory committee lenders,” the NCLAT said in its order on 26 May 2023.

The consortium of Murari Lal Jalan and Kalrock Capital had given a Performance Bank Guarantee for implementation of the resolution plan. As per the resolution plan, the consortium was to infuse Rs 175 crore as first tranche into the airline within 180 days from the Effective Date, which is the date on which the successful resolution applicant has fulfilled five conditions.

The NCLAT also noted that in the present case directions have been issued to both the lenders and SRA to implement the plan and that the event of failure of the plan has not yet arrived. Hence, the time has not arrived for invoking the performance bank guarantee.

“When the SRA is ready to undertake to perform its obligations under the plan, we are of the view that performance bank guarantee given by the SRA cannot be permitted to the invoked by the Monetary Committee (MC) Lenders. MC Lenders, instead of threatening to invoke Performance Bank Guarantee, should take steps, which may help implementation of the plan and to achieve the objective of resolution plan,” said the NCLAT.

The case so far

Jet Airways (India) Limited was admitted in insolvency on 20June 2019. A resolution plan was submitted by the consortium of Murari Lal Jalan and Kalrock Capital, which came to be approved by the Committee of Creditors on 21 September 2020. The Adjudicating Authority on 22 June 2021 approved the Rs 1,375 crore resolution plan of the consortium.

(ii) Various Appeals were filed in NCLAT challenging the NCLT order dated 21June 2021, which came to be decided by judgment of NCLAT dated 21 October 2022, upholding the approval of the Plan with certain directions.

(iii) The conditions precedent as contemplated in the resolution plan for operationalizing the Jet Airways were achieved on 20 May 2022 as per Successful Resolution Applicant, which was contested by the Monitoring Committee of Lenders.

The SRA wrote to MC Lenders to share necessary documents for execution and completion of necessary steps to enable SRA to start capital infusion in the Corporate Debtor and settle dues of the creditors in compliance with the approved resolution plan. The MC Lenders disputed the fulfilment of conditions precedent.

(iv) The SRA filed IA No.3398 of 2022 (implementation Application) and IA No.3508 of 2022 (Exclusion Application) before the Adjudicating Authority seeking exclusion of the period in Company Petition (IB) 2205/MB/2019 and also for direction to the MC Lenders to give control and management of the Corporate Debtor to SRA and declare 20 May 2022 to be an effective date. Further SRA sought exclusion of time from 20May 2022 till the decision of the Adjudicating Authority — from the 180 days’ period granted to infuse the first tranche of funds required under the Plan.

The Application was contested by the MC Lenders contending that effective date has not been achieved, since the SRA has not fulfilled the conditions precedent.

(v) By an order dated 13 January 2023, the Adjudicating Authority allowed the IA Nos.3398 and 3508 of 2022. The Adjudicating Authority held that SRA has fulfilled conditions precedent and 20 May 2022 was the effective date as per the Resolution Plan.

The Adjudicating Authority further excluded the period of 180 days from the period available with SRA to implement the Resolution Plan. As per the exclusion allowed by the Adjudicating Authority the timeline for the execution of the Plan stood extended till 15 May 2023.

(VI) After order dated 13 January 2023 of the Adjudicating Authority, the SRA wrote to the MC Lenders to cooperate with implementation of the Resolution Plan. The MC Lenders did not act as per the directions contained in the order dated 13 January 2023, rather challenged the order by filing the Company Appeal (AT) (Insolvency) Nos. 129 & 130 of 2023 in this Tribunal on 24 January 2023. The MC Lenders in the appeal also prayed for stay of the order dated 13 January 2023 of the Adjudicating Authority.

(vii) The Company Appeal (AT) (Insolvency) Nos. 129 & 130 of 2023 came to be heard by NCLAT on 03 March 2023 on which date the Tribunal declined to pass any interim order with regard to staying the order of the Adjudicating Authority dated 13 January 2023.

(viii) In the meantime, the order passed by this Tribunal approving the order of the Adjudicating Authority dated 21 October 2022 was challenged before the Supreme Court, which by an order dated 30 January 2023 has dismissed the MC lenders’ plea.

(ix) The NCLAT in its order dated 03 March 2023 took the view that resolution plan having been approved by the Adjudicating Authority and by this Tribunal as well as by the Supreme Court, all stake holders have to act in a manner so as to implement the resolution plan. NCLAT, therefore, declined to pass any interim order for staying the order dated 13 January 2023 passed by the Adjudicating Authority.

(X) The order passed by NCLAT on 03 March 2023 has been challenged by the lenders before the Supreme Court, which is pending consideration.

Also read: A deep dive into the resolution plan of Jet Airways