Jet Airways gets more time to repay SBI debt

In its order in the Jet Airways case, the appellate tribunal National Company Law Appellate Tribunal on Friday extended the deadline for the Jalan Kalrock Consortium to pay its dues to the SBI. The consortium, which emerged as the winning bidder, sought an injunction against SBI from encashing performance bank guarantees worth Rs 150 crore.

Jet Airways, a debt-ridden airline that operated for 25 years, suspended its operations on April 18, 2019. Subsequently, insolvency resolution proceedings began in June 2019, and in June 2021, the National Company Law Tribunal (NCLT) approved the resolution plan submitted by the Jalan Kalrock Consortium.

However, the implementation of the resolution plan has faced delays, creating uncertainty about the future of the once-renowned carrier. The resolution plan, which involved an equity infusion of Rs 9 billion (USD 108.6 million) and payments to creditors totalling Rs 4.75 billion (USD 57.3 million), has yet to be executed due to ongoing disputes between the consortium and creditors, primarily led by SBI. The plan included a significant discount on the admitted claims of Rs 77.08 billion (USD 942 million).

The consortium had issued bank guarantees amounting to USD 22.4 million, with a deadline to pay creditors, including SBI, by May 14, 2023. However, the Jalan Kalrock Consortium failed to meet the payment deadline, according to SBI's counsel.

On May 22, the NCLAT heard arguments from both parties and postponed its decision until the end of the month. The tribunal also urged the consortium and the creditors to collaborate and ensure the implementation of the resolution plan.

Adding to the challenges, Jet Airways' Air Operator's Certificate (AOC) expired last week, and it is still being determined whether the consortium has sought revalidation of the AOC.

Setbacks have marred the Jalan Kalrock Consortium's bid to acquire Jet Airways. Apart from the payment delays, several senior executives, including the CEO-designate, have recently resigned. Additionally, reports suggest that the consortium still needs to initiate the recruitment process for a new CEO.

As the acquisition approaches its third year, concerns are growing over the future of Jet Airways. The ongoing disputes and failures to fulfil financial obligations have hindered the completion of the sale process, preventing the airline from relaunching.

The NCLAT's decision to grant more time for the consortium to pay its dues signifies a potential opportunity to revive the resolution plan. However, the stakeholders will have to collaborate and address the underlying issues to ensure the successful revival of Jet Airways.