SC orders liquidation of Jet Airways
The Supreme Court in a pathbreaking judgment dashed all the hopes of revival of the Jet Aiways as it overturned the NCLAT’s ruling, which had approved the Jalan-Kalrock Consortium’s resolution plan for the ailing airline.
The court’s verdict mandates the liquidation of Jet Airways, which has been undergoing insolvency resolution for over five years.
The court’s decision was prompted by the consortium’s failure to fulfill its financial obligations, including the promised infusion of Rs 350 crore. The judges criticized the NCLAT’s judgment, deeming it perverse and a misinterpretation of legal principles.
The court further ordered the forfeiture of Rs 200 crore invested by the consortium and authorized lenders to invoke a Rs 150 crore bank guarantee to recover their dues. This double blow to the consortium effectively seals the fate of Jet Airways.
The airline’s creditors, including the State Bank of India, Punjab National Bank, and JC Flowers Asset Reconstruction, had challenged the NCLAT’s decision. The court’s ruling aligns with their interests, as well as those of the airline’s workers and other stakeholders.
Jet Airways ceased operations in April 2019. After a prolonged bankruptcy process, the NCLT approved the Jalan-Kalrock Consortium’s bid in June 2021. However, the consortium’s inability to meet its financial commitments has led to this unfortunate outcome.
Following the Supreme Court’s order, Jet Airways’ shares plunged, reflecting the market’s reaction to the airline’s imminent demise.
As per the resolution plan, the consortium of Kalrock Capital and UAE-based Murari Lal Jalan were to infuse Rs 1,375 crore over 2-3 years.
In the first 6 months, the management plans to infuse Rs 350 crore as equity, which would go towards CIRP costs, contingency fund, payment to financial creditors, operational creditors, other creditors, and other stakeholders, working capital for business and Miscellaneous admin expenses.
In the next six months, the management will another Rs 250 crore in the form of equity, and this amount will go towards working capital for business, acquiring Etihad’s stake in Jet Privilege Private Ltd; making payments to creditors if the successful resolution applicant is inclined in advancing any payment timelines.
The rest of the Rs 775 crore would be infused through debts in from the second year onwards. Most of this will go towards working capital requirements and remaining payment to financial creditors.
Of the Rs 1,375 crore, Rs 475 crores will be used for payment to stakeholders from successful resolution applicant’s cash infusion, and Rs 900 crores will be infused by new management for capital expenditure (CAPEX) and working capital requirements for smooth functioning of the corporate debtor.
Also See: Doubts lenders of Jet Airways have about Kalrock consortium’s revival plans
