The lenders to Jet Airways on Monday told the Supreme Court that there’s no option but to liquidate Jet Airways as the resolution plan approved by the National Company Law Tribunal (NCLT) was not working out.
Appearing for the committee of creditors (CoC), additional solicitor general N Venkatraman told the SC bench that Jalan Kalrock Consortium (JKC), which has emerged as the successful bidder, had not infused any funds into the company.
The Director General of Civil Aviation was not ready to renew the airline’s Air Operator’s Certificate, which expired in May, he said.
The consortium had not met its funds infusion target but was getting repeated extensions from tribunals. The company would have to go into liquidation if CoC were to recover any of its dues, Venkatraman said.
Seeking Jalan Kalrock’s response, the court has listed the next hearing in two weeks.
A JKC spokesperson said the the Supreme Court has not allowed or ordered for any liquidation of Jet Airways. “In fact, the court was surprised to hear when lenders spoke about liquidation. The court categorically stated that the resolution plan needs to be implemented and there is no question of liquidation,” the spokesperson said.
On July 5, the CoC had told the court that it has spent Rs 470 crore since the implementation of the insolvency process without getting any return on investment. The lenders said that they were incurring a Rs 23-crore expense every month.
The CoC is led by State Bank of India, which along with Punjab National Bank, IDBI, Canara Bank, ICICI Bank and others are owed `8,000 crore.
In May, the National Company Law Appellate Tribunal (NCLAT) granted more time to JKC to make payments to SBI.
The appellate tribunal had said that the NCLT had approved the consortium’s resolution plan in January, but the matter on appeal for stay was heard by it in March, which was turned down. Hence it would be proper that Jalan Kalrock Consortium gets an exclusion from November 16, 2022, till March 3, 2023, from complying with payment obligation towards SBI.
The NCLAT had also pulled up SBI for threatening to invoke bank guarantees instead of cooperating with JKC in implementing the resolution plan.
It had noted that there is no doubt that performance bank guarantee can be invoked by the lenders, but the said invocation can only take place when successful resolution applicant (SRA) has failed to implement the plan.
Thus, JKC had got additional time to pay its dues to SBI.
On January 13, the NCLT had allowed the transfer of the bankrupt airline to JKC led by London-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan.
It had also asked the consortium to make payments by May 15, 150 days from the initiation of the ownership proceedings.
The consortium was to make the first tranche of the payment to the lenders before May 15 but it didn’t and feared that SBI would invoke the performance bank guarantee of `150 crore in lieu of `175 crore worth of dues.
The airline’s ownership can’t be transferred to the consortium if the payment is not made. The air operator’s certificate of Jet Airways expired on May 19.