The National Company Law Tribunal’s (NCLT) Mumbai bench on Tuesday approved the Jalan-Kalrock consortium’s resolution plan for the revival of bankrupt Jet Airways. The development comes a little after two years since the airline suspended its operations due to financial crisis.
The Murari Lal Jalan-Kalrock consortium had offered Rs 1,183 crore to the lenders, which means a haircut of around 90% on the total admitted claims of Rs 15,525 crore.
Since the resolution plan needs to be implemented within a period of 90 days, the consortium would need to apply and get the necessary licences and slots at the airports from the Directorate General of Civil Aviation (DGCA) within this time frame. In case of any delays, the consortium would need to approach the NCLT again.
Since the DGCA and the civil aviation ministry had in the course of the hearings clarified that Jet Airways did not qualify for grant of slots on the basis of historic precedence and the allocation will be based on slot allocation guidelines, the consortium cannot lay claim to the slots which were earlier with Jet. The NCLT has also not given any direction on the historicity of the slot allocations. “The resolution plan is approved, subject to certain directions. The allocation of slots will be considered by the appropriate authority as and when they are applied for, and effective date will be 90 days from today,” the NCLT order said.
“Jet Airways does not qualify for grant of slots on the basis of historic precedence and the submission of the airline’s that it is in operation for the last 25 years is not a criteria for claiming historicity and it can’t substitute the requirements for claiming historic precedence. Thus, the claims are wrong and denied,” the DGCA and the civil aviation ministry had said earlier in a joint affidavit.
According to aviation sector experts, even if the consortium is not eligible to lay claim to the slots once held by Jet, it would not be difficult for it to get new slots at this point of time as because of the curtailed flying directions by the government at this point of time due to the pandemic, there are enough slots available.
Airlines are currently flying at 50% of their original capacity. Once the flying schedule is restored to normal, the DGCA is free to make fresh allocation of slots, so other airlines can also technically not lay claim to their earlier held slots. Further, the consortium also needs to acquire fresh aircraft through lease for commencing operations and it is unlikely that it can achieve the scale of what Jet once had in one go.
However, some legal hurdles still cannot be ruled out. Ashish Pyasi, associate partner, Dhir and Dhir Associates, said there is a possibility that the people whose rights are affected may go into appeal. “In the event an appeal is preferred, it may delay the implementation of the resolution plan,” he added.
In an interaction with CNBC TV18 on Tuesday, Ashish Chhawchharia, the resolution professional (RP) for Jet Airways, said there is no reason for DGCA to challenge the NCLT’s decision. He said he expected the DGCA and the consortium would soon come to an amicable solution.
The Kalrock-Jalan consortium had offered Rs 1,183 crore of repayment over a period of five years to the financial creditors, employees, and workmen of Jet. It had also offered about a 9.5% stake in Jet Airways and a 7.5% stake in Jet Privilege to the financial creditors.
Kalrock Capital is a UK-based asset management company, while Murari Lal Jalan is an entrepreneur based in the UAE.
Jet has admitted claims of Rs 7,460 crore from financial creditors. State Bank of India has the highest admitted claims of Rs 1,636 crore, followed by Yes Bank (Rs 1,084 crore) Punjab National Bank (Rs 754 crore) and IDBI Bank (Rs 594 crore), among others. The total amount claimed by lenders, including operational creditors, had crossed Rs 40,000 crore as on September 25, 2020.