The Committee of creditors (CoC) of Jet Airways want the deadline for the insolvency process to be extended by another 90 days. The decision was in-principle agreed upon at a meeting on Thursday. The 270-day deadline for the airline’s resolution ends on March 15.
Lenders have not received any concrete resolution plans so far, despite at least three parties having expressed interest. Besides the issue of Jet’s erstwhile slots, talks with potential buyers have “come to a standstill” due to the disruption caused by the coronavirus outbreak, sources said.
Currently, the Reserve Bank of India’s guidelines stipulate that the corporate insolvency resolution process (CIRP) of a company has to be wrapped up within 330 days. However, late last year, the Supreme Court observed that in exceptional cases the timeline for resolution can be extended beyond 330 days, which for Jet’s insolvency ends in May. “We will seek an extension of up to 90 days, a case will soon be presented before the National Company Law Tribunal (NCLT). Right now, talks with interested parties have not moved forward for the past two weeks. Coronavirus has brought things to a standstill. Besides that, the government should give some assurance on slots, without which moving forward looks difficult,” said a person involved in the process.
Lenders were advised against liquidating the airline at this point, the person added. “What value will you get for a grounded airline while the industry is reeling from the COVID-19 impact,” the source said.
Last month, a Russian government-backed fund had showed interest in the airline at the eleventh hour, following which the CoC called for a third round of expressions of interest. Russian Far East Development Fund is understood to have met officials from the Indian government, but they have not submitted a resolution plan. Colombian Synergy Group had earlier submitted an informal plan conditional on assurance of the airline’s slots in London and Amsterdam. The group, after engaging with the process for around four months, got cold feet when lenders could not guarantee the return of Jet’s slots and flying rights.
Jet Airways was grounded almost a year ago after it ran out of funds to continue operations. State Bank of India dragged the airline to insolvency court last year, after multiple failed attempts to sell it.
The NCLT admitted Jet Airways for insolvency in June 2019. Parties including the Hinduja Group were understood to be interested at some point, but did not take things forward. In the absence of promising bids, lenders even initiated the process of monetising some of Jet’s assets by selling its Amsterdam business to Royal Dutch KLM airlines in January.
Jet Airways was India’s second largest airline till 2018, with a 13.8% market share. When the airline was grounded in April 2019, around 16,000 permanent employees and over 6,000 employees were left stranded overnight.