A Dutch district court-appointed administrator Rocco Mulder through lawyers moved the National Company Law Tribunal (NCLT) on Wednesday to file an intervention application in the insolvency matter of Jet Airways filed by State Bank of India (SBI) on June 19.
However, the tribunal did not allow it and asked them to argue the matter on June 20.
The engineers’ and pilots’ associations also moved the tribunal seeking to be made parties to the ongoing insolvency matter.
The Mumbai bench of NCLT deferred the Jet case to June 20 as the plea moved by the operational creditors under section 9 of the Insolvency and Bankruptcy Code is also scheduled to be heard on June 20. The counsel representing SBI had sought an urgent hearing of the case considering the importance of the matter.
Jet was declared bankrupt by a local court in the Netherlands last month on an application made by two transport services providers. The district court then appointed Rocco Mulder as the administrator in the bankruptcy proceedings.
Although the administrator had said that, under the Dutch law, the opening of insolvency proceedings in the Netherlands has universal effect, however, he is aware of the fact that the Dutch court order cannot be enforced automatically in India.
The counsel representing the administrator said cross-border insolvency rules are not in place as of now. “We don’t know how things will work out if NCLT passes an order in the Jet insolvency case under the Indian law. So, we will present our arguments on Thursday on these questions of law in the instant matter,” she said.
Cross-border insolvency provisions come under sections 234 and 235 of the IBC, but they are not notified yet, so they cannot be enforced. According to Section 234, the government can enter into an agreement with any country outside India for enforcing the provisions of the IBC.
A report was submitted in October 2018 by the insolvency law committee on cross-border insolvency but no treaty or arrangement has been made so far. “In the absence of any provision on cross-border insolvency, the Dutch administrator will have to execute the order through a civil court in accordance with the provisions of the civil code. It may not have an effect on the NCLT proceedings at this stage because there is no provision on cross-border insolvency,” said Ashish Pyasi, principal associate with Dhir & Dhir Associates.
Jet was referred to the bankruptcy court by SBI, which is the lead banker in a consortium of 26 lenders.
It owes a debt of over Rs 8,000 crore to lenders, has not paid salaries to employees and has defaulted on the payment to the operational creditors.
Two operational creditors Shaman Wheels and Gaggar Enterprises have filed insolvency petitions. Jet owes over Rs 6 crore to Shaman Wheels and Rs 53 lakh to Gaggar Enterprises.
The airline was temporarily grounded on April 17. The shares of the beleaguered airline nosedived 18 per cent to Rs 33.10 on Wednesday, which came after a 41 per cent fall on Tuesday.
Source: Financial Express, June 19, 2019