It is finally curtains on attempts by lenders to revive the grounded Jet Airways by finding a buyer for it. On Monday, the State Bank of India-led consortium of lenders decided to send the carrier to the National Company Law Tribunal (NCLT) after failing to receive any concrete proposal from prospective buyers more than two months after the process started.
The decision was taken after a meeting of the lenders. “After due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received,” SBI said in a statement. The statement further said the move was necessitated as the prospective investor wants some Sebi exemption, which can be worked out better under the IBC.
The bank said lenders have been making efforts to find a resolution for the grounded carrier outside IBC but now have decided to seek a resolution within the IBC. Thus banks join two operational creditors — Shaman Wheels and Gaggar Enterprises — who on June 10 had moved the NCLT seeking bankruptcy proceedings against the airline. On June 13 the tribunal, which is yet to admit the petitions, put off the matter for further hearing to June 20. Jet owes Rs 8.74 crore to Shaman Wheels and Rs 53 lakh to Gaggar.
The grounded airline owes more than Rs 8,000 crore to the consortium of banks led by SBI, while it has a much larger debt pile by way of accumulated losses to the tune of Rs 13,000 crore, and vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.
In response to the offer floated by the lenders on April 8 seeking buyers for Jet, Abu Dhabi-based Etihad Airways, which owns a 24% stake in the airline, was the only party to show some interest. But it put several conditions like its ability to bring in funds only to the extent of Rs 1,700 crore, seeking exemption from any open offer, and asking lenders to look for other investors who could bring in funds.
On Monday, Etihad did not respond to FE’s queries till the time of going to the press. There were some unsolicited, non-serious bids from non-established players in the field of aviation but the lenders were not keen on them. At a later stage the Hinduja Group entered the scene by way of expressing some interest and there were hopes that it may tie up with Etihad and rope in some other investors. However, no formal proposal came before the lenders. The prospective buyers wanted a substantial haircut on the dues of the airline to the banks.
The Enforcement Directorate and Serious Fraud Investigation Office have initiated probes on the affairs of Jet Airways, which was also cited as one of reasons for any serious buyer to come forward to take a majority stake in the airline.
In the meanwhile, a section of Jet Airways’ pilots’ union were planning to move NCLT to recover their salaries and other dues. Interestingly, a Dutch court has already passed an ex-parte order declaring Jet Airways bankrupt in May, following a plea filed by two European operational creditors with dues of around Rs 280 crore.
Jet Airways halted operations on April 17 after lenders rejected its request to provide an emergency funding of around Rs 400 crore. Following it the civil aviation ministry allotted a significant portion of the airline’s slots in major airports to other scheduled carriers.
The civil aviation ministry had held that the allotment of slots of Jet Airways to other carriers was for a temporary period and once the airline was back in the business its rights would be restored to it.
Source: Financial Express, June 18, 2019