Jet Airways’ creditors and its new owners are deadlocked over a resolution plan to get the Indian airline out of bankruptcy, four sources said, leaving its future in limbo. A senior banker said if there is no resolution at the crucial court hearing on Tuesday, the creditors may approach India’s aviation ministry to seek approval to sell Jet’s assets.
“There are concerns that the resolution plan could fail, so we want to see if we can get something out of this deal, at least through the liquidation route,” a banker with direct knowledge of the matter told Reuters on Monday. India’s largest private airline, Jet, stopped flying in April 2019 after running out of cash. It was taken to bankruptcy court, owed about 180 billion rupees ($2 billion) by creditors.
A restructuring plan was approved by the National Company Law Tribunal (NCLT) in June and Jet is set to resume operations by the first quarter of 2022 under its new owners. However, disagreements between the new owners, a consortium including London-based Calrock Capital and UAE-based businessman Murari Lal Zala, and its lenders risk derailing Jet’s recovery.
A spokesman for Jet’s owners said in a statement on Monday that the resolution plan was binding on all parties involved and had been approved by the bankruptcy court. “We are working closely” with Jet’s former creditors to implement this plan, and are “fully committed” to getting Jet Airways off the ground.
State Bank of India, the lead lender to the lender group, declined to comment. The court-appointed resolution professional overseeing the case did not immediately respond to an emailed request for comment from Reuters.
capital requirement
The banking source said Jet’s creditors believe it needs around Rs 10 billion of capital to fully run its operations, but it has not managed to bring that amount to the table.
“So far they have only shown that they have received bank guarantees of 1.5 billion rupees and about 200 million in cash, which is not enough to run operations,” he said.
But a source close to Jet said it has met all the conditions of the resolution plan and the committee of creditors has also done due diligence on the Jalan-Kalrock consortium’s ability to raise funds.
The person said that 10 billion rupees are to be injected over two years to pay 2.7 billion immediately to banks and other creditors.
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