Jet Airways: An Insolvency Resolution Journey

Jet Airways, which started off as an air taxi operator in 1993 and became a scheduled carrier in 1995, has been under insolvency for two years after it shut operations in April 2019 under a heavy debt. Jet Airways  is the first Indian carrier/airline to undergo insolvency proceedings under the Cross Border Insolvency Protocol along with the Insolvency and Bankruptcy Code (IBC) of India.

FACTS:

A Company petition was filed in the National Company Law Tribunal (NCLT), Mumbai against Jet Airways (India) Limited (“Company”) u/s 30(6) read with Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016 for the initiation of insolvency proceedings by State Bank of India in the capacity of it being a Financial Creditor to the Company.

An applicant name Ashish Chhawchharia was a Resolution Professional for Jet Airways (India) Ltd. An application was filed by the Resolution Professional seeking approval of the Resolution Plan submitted by Jalan Fritsch Consortium, which consists of Mr. Murari Lal Jalan (a Non-Resident Indian based in United Arab Emirates) and Mr. Florian Fritsch (Kalrock Capital Partners Ltd, Cayman [KCPL]).

The Insolvency Resolution Plan was approved by the Committee of Creditors as well as the NCLT, Mumbai via order dated 22nd June 2021.

RESOLUTION JOURNEY:

The tribunal decision comes exactly two years after the insolvency procedures began. The Mumbai bench of the National Company Law Tribunal (NCLT) cleared the resolution plan to revive Jet Airways and directed the Jalan-Kalrock consortium to get the required approval and licences to restart the airline within 90 days.

The tribunal rejected pleas by lawyers representing the Ministry of Civil Aviation (MoCA) and the Directorate General of Civil Aviation (DGCA) against the approval. DGCA and MoCA previously stated that the consortium cannot claim historicity on slots that were held by Jet before its bankruptcy. The slots were later distributed to other airlines. Hence, the consortium’s demand for historicity of airport slots was rejected. With reference to Section 14(1)(d) of the Code, the learned senior counsel appearing for the Union of India relied upon the principle enunciated by the Hon’ble Apex Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority & Anr.: (2020) 13 SCC 208 and submitted that the Corporate Debtor was not in possession of the slots on the date of the insolvency commencement. It accordingly cannot claim any right to the slots.

In October 2020, the committee of creditors (CoC) approved the Jalan-Kalrock consortium’s resolution plan. The consortium proposes to invest ₹600 crore in the first two years to repay creditors and acquire an 89.79% stake in the carrier. The resolution plan also proposes selling existing non-core assets such as real estates and luxury cars by the end of the first year and said it will repay to financial creditors, ₹131 crore, ₹193 crore, ₹259 crore at the end of the third, fourth and fifth years, from the airline’s cash flows, respectively. The company intends to repay creditors a total of ₹1,183 crore over five years, which includes collections from asset sale proceeds and cash flows.

As a result, the new promoters will also retain the ‘Jet Airways’ brand and will resume operations with about 25 aircraft, with a base in New Delhi, and restart international flights soon after. Accordingly, the Articles of Association (AoA) and Memorandum of Association (MoA) shall be amended and filed with the Registrar of Companies (RoC) concerned for information and record. For the plan to be implemented effectively, the Resolution Applicant shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed. The Monitoring Committee shall supervise the implementation of the Resolution Plan and shall file Status Report of its implementation before this Authority from time to time, preferably every quarter.

OUTCOME:

The Hon’ble Apex Court observed that the role of the NCLT is ‘no more and no less’. The NCLT matter was taken up the Coram: Janab Mohammed Ajmal, Hon’ble Member (Judicial) Shri V. Nallasenapathy, Hon’ble Member (Technical). The order pronounced I.A. No. 2081/2020 in C.P. (IB) No. 2205/MB/2019.

The Resolution Plan submitted by consortium of Mr Murari Lal Jalan and Mr Florian Fritsch annexed to the Application is hereby approved. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government, or any local authority to whom a debt in respect of the payment arising under any law for the time being in force is due, guarantors and other stakeholders involved in the Resolution Plan. Therefore, the resolution plan was so accepted and approved.

Author: Poonam Nahar – a student from Marathwada Mitra Mandal’s Shankarrao Chavan Law College (Pune), currently an intern at Khurana & Khurana, Advocates and IP Attorney., in case of any queries please contact/write back to us via email vidushi@khuranaandkhurana.com.

Leave a Reply

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • September 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010